Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 11, 2017 | Dec. 31, 2016 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | FORWARD INDUSTRIES INC | ||
Entity Central Index Key | 38,264 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Smaller Reporting Company | ||
Trading Symbol | FORD | ||
Entity Common Stock, Shares Outstanding | 8,920,830 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 7,000,000 |
CONSOLIDATED BALANCE SHEETS (Au
CONSOLIDATED BALANCE SHEETS (Audited) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Current assets: | ||
Cash | $ 4,622,981 | $ 4,760,620 |
Accounts receivable | 6,218,563 | 4,864,423 |
Inventories | 2,120,971 | 2,572,980 |
Prepaid expenses and other current assets | 157,930 | 141,421 |
Total current assets | 13,120,445 | 12,339,444 |
Property and equipment, net | 20,658 | 43,030 |
Other assets | 12,843 | 12,843 |
Total Assets | 13,153,946 | 12,395,317 |
Current liabilities: | ||
Accounts payable | 67,351 | 62,136 |
Due to Forward China | 3,736,451 | 3,519,676 |
Accrued expenses and other current liabilities | 382,759 | 587,741 |
Total current liabilities | 4,186,561 | 4,169,553 |
Other liabilities | 36,963 | 51,486 |
Total Liabilities | 4,223,524 | 4,221,039 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 40,000,000 shares authorized; 8,920,830 and 8,780,830 shares issued and outstanding at September 30, 2017 and 2016, respectively | 89,208 | 87,808 |
Additional paid-in capital | 17,936,673 | 17,783,060 |
Accumulated deficit | (9,095,459) | (9,674,805) |
Accumulated other comprehensive loss | 0 | (21,785) |
Total shareholders' equity | 8,930,422 | 8,174,278 |
Total liabilities and shareholders' equity | $ 13,153,946 | $ 12,395,317 |
CONSOLIDATED BALANCE SHEETS (A3
CONSOLIDATED BALANCE SHEETS (Audited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Sep. 30, 2016 |
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) | 8,920,830 | 8,780,830 |
Common stock, shares outstanding (in shares) | 8,920,830 | 8,780,830 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (AUDITED) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||
Net revenues | $ 24,764,613 | $ 27,479,896 |
Cost of goods sold | 20,572,970 | 22,399,734 |
Gross profit | 4,191,643 | 5,080,162 |
Operating expenses | ||
Sales and marketing | 1,502,700 | 1,891,409 |
General and administrative | 2,090,473 | 2,571,799 |
Total operating expenses | 3,593,173 | 4,463,208 |
Operating income | 598,470 | 616,954 |
Other income (expense), net: | ||
Other income (expense), net | (19,124) | (10,392) |
Income before income taxes | 579,346 | 606,562 |
Provision for income taxes | 0 | 0 |
Net income | 579,346 | 606,562 |
Other comprehensive income: | ||
Translation adjustments | 21,785 | 0 |
Comprehensive income | $ 601,131 | $ 606,562 |
Net income per basic common share | $ .07 | $ .07 |
Net income per diluted common share | $ .07 | $ .07 |
Weighted average number of common and common equivalent shares outstanding | ||
Basic | 8,727,322 | 8,521,188 |
Diluted | 8,823,059 | 8,675,583 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Audited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income / Loss | Total |
Beginning balance, shares at Sep. 30, 2015 | 8,641,755 | ||||
Beginning balance, value at Sep. 30, 2015 | $ 86,418 | $ 17,550,047 | $ (10,281,367) | $ (21,785) | $ 7,333,313 |
Restricted stock award issuances, shares | 141,817 | ||||
Restricted stock award issuances, value | $ 1,418 | (1,418) | |||
Restricted stock repurchased and retired, shares | (1,076) | ||||
Restricted stock repurchased and retired, value | $ (11) | (1,656) | (1,667) | ||
Restricted stock award forfeitures, shares | (1,666) | ||||
Restricted stock award forfeitures, value | $ (17) | 17 | |||
Share-based compensation | 236,070 | 236,070 | |||
Foreign currency translation | 0 | ||||
Net income | 606,562 | 606,562 | |||
Ending balance, shares at Sep. 30, 2016 | 8,780,830 | ||||
Ending balance, value at Sep. 30, 2016 | $ 87,808 | 17,783,060 | (9,674,805) | (21,785) | 8,174,278 |
Restricted stock award issuances, shares | 140,000 | ||||
Restricted stock award issuances, value | $ 1,400 | (1,400) | |||
Share-based compensation | 155,013 | 155,013 | |||
Foreign currency translation | 21,785 | 21,785 | |||
Net income | 579,346 | 579,346 | |||
Ending balance, shares at Sep. 30, 2017 | 8,920,830 | ||||
Ending balance, value at Sep. 30, 2017 | $ 89,208 | $ 17,936,673 | $ (9,095,459) | $ 0 | $ 8,930,422 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (AUDITED) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities: | ||
Net income | $ 579,346 | $ 606,562 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Share-based compensation | 155,013 | 236,070 |
Depreciation and amortization | 22,372 | 52,754 |
Loss on disposal of property and equipment | 0 | 31,070 |
Deferred rent | (11,973) | (17,437) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,354,140) | 589,706 |
Inventories | 452,009 | 293,484 |
Prepaid expenses and other current assets | (16,509) | 154,591 |
Other assets | 0 | 28,119 |
Accounts payable and due to Forward China | 243,775 | (709,012) |
Accrued expenses and other current liabilities | (207,532) | (445,880) |
Other liabilities | 0 | (51,743) |
Net cash provided by (used in) operating activities | (137,639) | 768,284 |
Cash Flows From Investing Activities: | ||
Purchases of property and equipment | 0 | (48,121) |
Net cash used in investing activities | 0 | (48,121) |
Cash Flows From Financing Activities: | ||
Restricted stock repurchased and retired | 0 | (1,667) |
Net cash used in financing activities | 0 | (1,667) |
Net increase (decrease) in cash | (137,639) | 718,496 |
Cash at beginning of period | 4,760,620 | 4,042,124 |
Cash at end of period | 4,622,981 | 4,760,620 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 0 | 0 |
Cash paid for taxes | $ 0 | $ 0 |
1. OVERVIEW
1. OVERVIEW | 12 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OVERVIEW | Forward Industries, Inc. (“Forward” or the “Company”) designs 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 and recreational products, bar code scanners, smartphones, GPS location devices, tablets, and firearms). The Company’s OEM customers are located in: (i) the Asia-Pacific Region, which we refer to as the “APAC Region”; (ii) Europe, the Middle East, and Africa, which we refer to as the “EMEA Region”; and (iii) the Americas. The Company does not manufacture any of its OEM products and sources substantially all of its OEM products from independent suppliers in China, through Forward China (See Note 10 – Buying Agency and Supply Agreement). |
2. ACCOUNTING POLICIES
2. ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly owned subsidiaries (Forward US and Forward Switzerland). All significant intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at September 30, 2017 and 2016. The Company maintains its cash in bank and financial institution deposits in the United States (that at times may exceed federally insured limits of $250,000 per financial institution) and Switzerland. At September 30, 2017 and 2016, there were deposits totaling approximately $4.4 million (which includes $1.4 million in a foreign bank) and $4.5 million (which includes $2.7 million in a foreign bank), respectively, held in excess of federally insured limits. Historically, we have not experienced any losses due to such cash concentrations. Accounts Receivable Accounts receivable consist of unsecured trade accounts with customers or their contract manufacturers. The Company performs periodic credit evaluations of its customers including an evaluation of days outstanding, payment history, recent payment trends, and perceived creditworthiness, and believes that adequate allowances for any uncollectible receivables are maintained. Credit terms to customers generally range from net thirty (30) days to net one hundred twenty (120) days. The Company has not historically experienced significant credit or collection problems with its OEM customers or their contract manufacturers. At September 30, 2017 and 2016, no allowance for doubtful accounts relating to the Company’s accounts receivable was deemed necessary. Inventories Inventories consist primarily of finished goods and are stated at the lower of cost (determined by the first-in, first-out method) or market. Based on management’s estimates, an allowance is made to reduce excess, obsolete, or otherwise un-saleable inventories to net realizable value. The allowance is established through charges to cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. As reserved inventory is disposed of, the Company charges off the associated allowance. In determining the adequacy of the allowance, management’s estimates are based upon several factors, including analyses of inventory levels, historical loss trends, sales history and projections of future sales demand. The Company’s estimates of the allowance may change from time to time based on management’s assessments, and such changes could be material. At September 30, 2017 and 2016, there was no allowance for obsolete inventory. Property and Equipment Property and equipment consists of furniture, fixtures, and equipment and leasehold improvements and are recorded at cost. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives for furniture, fixtures and equipment ranges from three to five years. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. Leases The Company enters into various lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Leases may contain initial periods of free rent and/or periodic escalations. When such items are included in a lease agreement, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a deferred rent liability. The Company expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. Income Taxes The Company accounts for its income taxes in accordance with accounting principles generally accepted in the United States of America, 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 carryforwards to the extent that realization of these benefits is more likely than not. The Company periodically evaluates the realizability of its net deferred tax assets (See Note 7 – Income Taxes). The Company’s policy is to account for interest and penalties relating to income taxes, if any, in “income tax expense” in its consolidated statements of operations and comprehensive income and include accrued interest and penalties within “accrued liabilities” in its consolidated balance sheets, if applicable. For fiscal years ended September 30, 2017 and 2016, no income tax related interest or penalties were assessed or recorded. Revenue Recognition The Company generally recognizes revenue from product sales to its customers when: (i) 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); (ii) persuasive evidence of an arrangement exists; (iii) the Company has no continuing obligations to the customer; and (iv) collection of the related accounts receivable is reasonably assured. The Company defers revenue when it receives consideration before achieving the criterion previously mentioned. Shipping and Handling Fees The Company includes shipping and handling fees billed to customers in net revenues and the related transportation costs in cost of goods sold. Foreign Currency Transactions Foreign currency transactions may generate receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. Fluctuations in exchange rates between such foreign currency and the functional currency increase or decrease the expected amount of functional currency cash flows upon settlement of the transaction. These increases or decreases in expected functional currency cash flows are foreign currency transaction gains or losses that are included in “other income (expense)” in the accompanying consolidated statements of operations and comprehensive income. The approximate net losses from foreign currency transactions were approximately $29,000 and $16,000 for the fiscal years ended September 30, 2017 and 2016, respectively. Such foreign currency transaction losses were primarily the result of Euro denominated revenues from certain customers. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, which is included as a component of shareholders’ equity, represents translation adjustments related to the Company’s foreign subsidiary. As a result of the dissolution of certain foreign subsidiaries, the related accumulated other comprehensive loss was reclassified out of shareholders’ equity. Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses and other current liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. Share-Based Compensation Expense The Company recognizes employee and director share-based compensation in its consolidated statements of operations and comprehensive income 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. 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 (See Note 6 - Share-Based Compensation). R ecent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of fiscal 2019 and plans to apply the full retrospective approach. Because the Company's primary source of revenues is from the sale of finished goods, the Company does not anticipate that the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements, disclosures or processes. In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Before this new standard, there was minimal guidance in U.S. GAAP specific to going concern. Under the new standard, disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. The new standard applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. The Company adopted ASU 2014-15 in the fourth quarter of fiscal 2017. The adoption of ASU 2014-15 did not have a material impact on the Company’s 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, first-out (“LIFO”). This ASU was 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 adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. 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 was 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. Early adoption is permitted. The Company adopted ASU 2015-17 in the fourth quarter of fiscal 2017. The adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. This ASU requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented. The new standard is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-09 in the fourth quarter of fiscal 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This ASU is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. Adoption of this ASU is prospective. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated financial statements. |
3. PROPERTY AND EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment and related accumulated depreciation and amortization are summarized in the table below: September 30, 2017 2016 Furniture, fixtures and equipment $ 333,748 $ 333,748 Leasehold improvements 42,020 42,020 Property and equipment, cost 375,768 375,768 Less: accumulated depreciation and amortization (355,110 ) (332,738 ) Property and equipment, net $ 20,658 $ 43,030 Depreciation and amortization expense was $22,372 and $52,754 for the fiscal years ended September 30, 2017 and 2016, respectively. |
4. ACCRUED EXPENSES AND OTHER C
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Accrued expenses and other current liabilities are summarized in the table below: September 30, 2017 2016 Deferred revenue $ 169,642 $ 309,571 Personnel cost 129,582 256,144 Insurance payable 53,240 - Other 30,295 22,026 Accrued expenses and other current liabilities $ 382,759 $ 587,741 |
5. SHAREHOLDERS' EQUITY
5. SHAREHOLDERS' EQUITY | 12 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | Anti-takeover Provisions Shareholder Rights Plan On April 26, 2013, the Board of Directors (the “Board”) adopted a Shareholder Rights Plan, as set forth in the Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the Rights Agreement, the Board declared a dividend distribution of one Right (a “Right”) for each outstanding share of Company Common Stock, par value $0.01 per share (the “Common Stock”) to shareholders of record at the close of business on May 6, 2013, which date will be the record date, and for each share of Common Stock issued (including shares distributed from treasury) by the Company thereafter and prior to the Distribution Date (as described below and defined in the Rights Agreement). Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”), at an exercise price of $4.00 per one one-thousandth of a share of Series A Preferred Stock, subject to adjustment. Initially, no separate Rights certificates will be distributed and instead the Rights will attach to all certificates representing shares of outstanding Common Stock. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and become exercisable on the distribution date (the “Distribution Date”), which will occur on the earlier of: (i) the 10th business day (or such later date as may be determined by the Board) after the public announcement that an Acquiring Person (as defined in the Rights Agreement) has acquired beneficial ownership of 20% or more of the Common Stock then outstanding; or (ii) the 10th business day (or such later date as may be determined by the Board) after a person or group announces a tender or exchange offer that would result in a person or group of affiliated and associated persons beneficially owning 20% or more of the Common Stock then outstanding. “Blank Check” Preferred Stock The Company is authorized to issue up to 4,000,000 shares of “blank check” preferred stock. The Board has the authority and discretion, without shareholder approval, to issue preferred stock in one or more series for any consideration it deems appropriate, and to fix the relative rights and preferences thereof including their redemption, dividend and conversion rights. Of these shares, 100,000 shares have been authorized as the Series A Participating Preferred Stock. There were no shares of preferred stock outstanding at September 30, 2017 and 2016. Warrants Between June 28, 2013 and August 14, 2013, the Company issued ten-year warrants to purchase 648,846 shares of common stock with an exercise price of $1.84 per share. During the fiscal year ended September 30, 1999, the Company issued warrants to purchase an aggregate of 75,000 shares of common stock at an exercise price of $1.75 per share. By their terms these warrants expire 90 days after a registration statement registering common stock (other than pursuant to employee benefit plans) is declared effective by the United States Securities and Exchange Commission (the “Commission”). As of September 30, 2017, no such registration statement has been filed with the Commission. 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. On September 24, 2017, the Company terminated the stock repurchase program. Under the repurchase authorizations, through September 24, 2017, the Company repurchased an aggregate of 224,690 shares at a cost of approximately $487,000. During the fiscal years ended September 30, 2017 and 2016, the Company repurchased and retired an aggregate of 0 and 1,076 shares, respectively, of its outstanding restricted common stock at a cost of approximately $0 and $2,000, respectively, 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. |
6. SHARE-BASED COMPENSATION
6. SHARE-BASED COMPENSATION | 12 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | 2011 Long Term Incentive Plan In March 2011, shareholders of the Company approved the 2011 Long Term Incentive Plan (the “2011 Plan”), which authorizes 850,000 shares of common stock for grants of various types of equity awards to officers, directors, employees, consultants, and independent contractors. Forfeited awards are eligible for re-grant under the 2011 Plan. The total shares of common stock available for grants of equity awards under the 2011 Plan was 321,479 as of September 30, 2017. The exercise prices of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. The Compensation Committee administers the plan. Options generally expire ten years after the date of grant. 2007 Equity Incentive Plan The 2007 Equity Incentive Plan (the “2007 Plan”), which was approved by shareholders of the Company in May 2007, and, as amended, in February 2010, authorizes an aggregate of 800,000 shares of common stock for grants of restricted common stock and stock options to officers, employees, and non-employee directors of the Company. Forfeited awards are eligible for re-grant under the 2007 Plan. The total shares of common stock available for grants of equity awards under the 2007 Plan was 17,823 as of September 30, 2017. The exercise price of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. The Compensation Committee administers the 2007 Plan. Options generally expire ten years after the date of grant. 1996 Stock Incentive Plan The Company’s 1996 Stock Incentive Plan (the “1996 Plan”) expired in accordance with its terms in November 2006. The exercise price of incentive stock options granted under the 1996 Plan to officers, employees, and non-employee directors of the Company was required by 1996 Plan provisions to be equal at least to the fair market value of the common stock at the date of grant. In general, options under this plan expired ten years after the date of grant. Unexercised options granted prior to 1996 Plan expiration remained outstanding until the earlier of exercise or option expiration. Under the 1996 Plan, the remaining 20,000 fully vested common stock options expired unexercised during the year ended September 30, 2016. Stock Option Awards There were no options granted during the fiscal years ended September 30, 2017 and 2016. The Company recognized compensation expense of approximately $5,000 and $10,000 during the fiscal years ended September 30, 2017 and 2016, respectively, for stock option awards in its consolidated statements of operations and comprehensive income. As of September 30, 2017, there was approximately $3,000 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 0.7 years. The following table summarizes stock option activity during the fiscal years ended September 30, 2017 and 2016: 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 (25,000 ) 0.67 Expired (20,000 ) 6.02 Outstanding, September 30, 2016 266,000 2.27 Granted - Exercised - Forfeited (10,000 ) 3.73 Expired (10,000 ) 2.85 Outstanding, September 30, 2017 246,000 $ 2.19 3.9 $ 33,700 Exercisable, September 30, 2017 223,498 $ 2.35 3.5 $ 20,499 The table below provides additional information regarding stock option awards that were outstanding and exercisable at September 30, 2017: 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 $ 1.00 97,500 $ 1.11 5.3 74,998 $2.00 to $2.99 2.41 86,000 2.41 2.1 86,000 $3.00 to $3.79 3.74 62,500 3.74 3.4 62,500 246,000 3.5 223,498 Restricted Stock Awards On October 26, 2015, the Company granted 17,500 shares of restricted stock, pursuant to the 2007 Plan, to a former 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 former 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. On February 23, 2016, the Company granted an aggregate of 124,317 shares of restricted stock to directors of the Company, pursuant to the 2007 Plan. The shares vest on the one-year anniversary from the date of grant. The aggregate grant date value of $182,746 will be recognized ratably over the vesting period. On June 10, 2017, the Company granted an aggregate of 140,000 shares of restricted stock to directors of the Company, pursuant to the 2011 Plan. The shares vest on February 23, 2018. The aggregate grant date value of $149,800 will be recognized ratably over the vesting period. The Company recognized compensation expense of approximately $150,000 and $226,000 for restricted stock awards in its consolidated statements of operations and comprehensive income for the fiscal years ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was approximately $85,000 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 0.4 years. The following table summarizes restricted stock activity during the fiscal years ended September 30, 2017 and 2016: 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 141,817 1.43 202,521 Vested (244,166 ) 0.92 (224,758 ) Forfeited (1,666 ) 1.67 (2,782 ) Non-vested, September 30, 2016 159,317 1.29 205,146 Granted 140,000 1.07 149,800 Vested (139,317 ) 1.38 (192,346 ) Forfeited - - - Non-vested, September 30, 2017 160,000 $ 1.02 $ 162,600 |
7. INCOME TAXES
7. INCOME TAXES | 12 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company’s provision (benefit) for income taxes consists of the following United States federal and state, and foreign components: For the Fiscal Years Ended September 30, 2017 2016 Current: Federal $ - $ - State - - Foreign - - Deferred: Federal 234,521 74,467 State 13,795 10,951 Foreign (21,861 ) 127,454 226,455 212,872 Change in valuation allowance (226,455 ) (212,872 ) Income tax provision (benefit) $ - $ - The deferred tax expense (benefit) is the change in the deferred tax assets and liabilities representing the tax consequences of changes in the amounts of temporary differences, net operating loss carryforwards and changes in tax rates during the fiscal year. The Company’s deferred tax assets and liabilities are comprised of the following: September 30, 2017 2016 Deferred tax assets: Net operating losses $ 3,522,733 $ 3,689,028 Capital loss carryforwards 354,272 383,795 Share-based compensation 127,821 155,180 Alternative minimum tax credit 99,757 99,757 Excess tax over book basis in inventory 49,032 85,573 Excess tax over book basis in fixed assets 1,254 - 4,154,869 4,413,333 Valuation allowance (4,114,043 ) (4,340,498 ) Net deferred tax assets 40,826 72,835 Deferred tax liabilities: Prepaid insurance (40,826 ) (59,599 ) Excess book over tax basis in fixed assets - (13,236 ) (40,826 ) (72,835 ) Total $ - $ - As of September 30, 2017 and 2016, the Company has no unrecognized income tax benefits. At September 30, 2017, the Company had available total net operating loss carryforwards for U.S. federal and state income tax purposes of approximately $9,268,000 and $1,744,000, respectively, expiring through 2037, resulting in deferred tax assets in respect of U.S. federal and state income taxes of approximately $3,151,000 and $69,000, respectively. In addition, at September 30, 2017 and 2016, the Company had total available net operating loss carryforwards for foreign income tax purposes of approximately $3,360,000 and $3,188,000, resulting in a deferred tax asset of approximately $302,000 and $281,000, respectively, expiring through 2024. The Company has capital loss carryovers of approximately $984,000 expiring through 2020, resulting in deferred tax assets in respect of U.S. federal and state income taxes of approximately $354,000. Total net deferred tax assets, before valuation allowances, was $4,155,000 and $4,413,000 at September 30, 2017 and 2016, respectively. Undistributed earnings of the Company’s foreign subsidiaries are considered to be permanently reinvested; therefore, in accordance with U.S. generally accepted accounting principles, no provision for U.S. federal and state income taxes would result. In the fiscal year ended September 30, 2017, Forward Switzerland had net income of approximately $627,000, however, the Company’s foreign subsidiary had an accumulated deficit as of September 30, 2017. As of September 30, 2017, as part of its periodic evaluation of the necessity to maintain a valuation allowance against its deferred tax assets, and after consideration of all factors, both positive and negative (including, among others, projections of future taxable income, current year net operating loss carryforward utilization and the extent of the Company’s cumulative losses in recent years), the Company determined that, on a more likely than not basis, it would not be able to use its remaining deferred tax assets (except in respect of the United States income taxes in the event the Company elects to effect the repatriation of certain foreign source income of its Swiss subsidiary, which income is currently considered to be permanently reinvested and for which no United States tax liability has been accrued). Accordingly, the Company has determined to maintain a full valuation allowance against its net deferred tax assets. As of September 30, 2017 and 2016, the valuation allowances were approximately $4,114,000 and $4,340,000, respectively. In the future, the utilization of the Company's net operating loss carryforwards may be subject to certain change of control limitations. If the Company determines in a future reporting period that it will be able to use some or all of its deferred tax assets, the adjustment to reduce or eliminate the valuation allowance would reduce its tax expense and increase after-tax income. Changes in deferred tax assets and valuation allowance are reflected in the “Provision for income taxes” line item of the Company’s consolidated statements of operations and comprehensive income. The significant elements contributing to the difference between the United States federal statutory tax rate and the Company’s effective tax rate are as follows: For the Fiscal Years Ended September 30, 2017 2016 US federal statutory rate 34.0% 34.0% State tax rate, net of federal benefit (0.2%) 5.0% Permanent differences: Share-based compensation 2.5% (8.3%) Other (0.6%) 0.4% Foreign rate differential (27.1%) (13.3%) Other 34.3% 17.3% Change in valuation allowance (42.9%) (35.1%) Income tax provision (benefit) 0.0% 0.0% As of September 30, 2017 and 2016, the Company has not accrued any interest and penalties related to uncertain tax positions. It is the Company’s policy to recognize interest and/or penalties, if any, related to income tax matters in income tax expense in the consolidated statements of operations and comprehensive income. For the periods presented in the accompanying consolidated statements of operations and comprehensive income, no material income tax related interest or penalties were assessed or recorded. All fiscal years prior to the fiscal year ended September 30, 2014 are closed to federal and state examination. |
8. EARNINGS PER SHARE
8. EARNINGS PER SHARE | 12 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Basic income 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 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: (i) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method; and (ii) shares of non-vested restricted stock. For the fiscal years ended September 30, 2017 and 2016, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows: For the Fiscal Years Ended September 30, 2017 2016 Numerator: Net income $ 579,346 $ 606,562 Denominator: Weighted average shares outstanding - basic 8,727,322 8,521,188 Effects of dilutive securities: Assumed exercise of stock options, treasury stock method 21,179 28,289 Assumed vesting of restricted stock, treasury stock method 74,558 126,106 Weighted average dilutive potential common shares 95,737 154,395 Weighted average shares outstanding - diluted 8,823,059 8,675,583 Basic earnings per share $ 0.07 $ 0.07 Diluted earnings per share $ 0.07 $ 0.07 The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Fiscal Years Ended September 30, 2017 2016 Options 188,500 188,500 Warrants 723,846 723,846 Total potentially dilutive shares 912,346 912,346 |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Guarantee Obligation In February 2010, Forward Switzerland and its European logistics provider (freight forwarding and customs agent) entered into a Representation Agreement (the “Representation Agreement”) whereby, among other things, the European logistics provider agreed to act as Forward Switzerland's Fiscal representative in The Netherlands for the purpose of providing services in connection with any value added tax matters. As part of this agreement, Forward Switzerland agreed to provide an undertaking (in the form of a bank letter of guarantee) to the logistics provider with respect to any value added tax liability arising in The Netherlands that the logistics provider is required to pay to Dutch tax authorities on its behalf. As of February 1, 2010, Forward Switzerland entered into a guarantee agreement with a Swiss bank relating to the repayment of any amount up to €75,000 (equal to approximately $89,000 as of September 30, 2017) paid by such bank to the logistics provider in order to satisfy such undertaking pursuant to the bank letter of guarantee. Forward Switzerland would be required to perform under the guarantee agreement only in the event that: (i) a value added tax liability is imposed on the Company's revenues in The Netherlands; (ii) the logistics provider asserts that it has been called upon in its capacity as surety by the Dutch Receiver of Taxes to pay such taxes; (iii) Forward Switzerland or the Company on its behalf fails or refuses to remit the amount of value added tax due to the logistics provider upon its demand; and (iv) the logistics provider makes a drawing under the bank letter of guarantee. Under the Representation Agreement, Forward Switzerland agreed that the letter of guarantee would remain available for drawing for three years following the date that its relationship terminates with the logistics provider to satisfy any value added tax liability arising prior to expiration of the Representation Agreement but asserted by The Netherlands after expiration. The initial term of the bank letter of guarantee expired February 28, 2011, but renews automatically for one-year periods on February 28 of each subsequent year unless Forward Switzerland provides the Swiss bank with written notice of termination at least 60 days prior to the renewal date. It is the intent of Forward Switzerland and the logistics provider that the bank letter of guarantee amount be adjusted annually. In consideration of the issuance of the letter of guarantee, Forward Switzerland has granted the Swiss bank a security interest in all of its assets on deposit with, held by, or credited to Forward Switzerland’s accounts with, the Swiss bank (approximately $1.4 million at September 30, 2017). As of September 30, 2017, the Company had not incurred a liability in connection with this guarantee. Lease Commitments The Company leases office space for its corporate headquarters in West Palm Beach, Florida under a 90-month agreement expiring in September 2020. The operating lease granted six initial months of free rent and escalates at 3% per year. The monthly rent payment is $7,164, which includes common area maintenance costs. The Company leases office space for its office in Cham, Switzerland on a month-to-month basis. The monthly rent payment is $1,599 CHF, which is approximately $1,615 US. Rent expense for the years ended September 30, 2017 and 2016 amounted to approximately $88,000 and $107,000 (net of $11,000 and $168,000 of rental income from an expired sublease), respectively. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of September 30, 2017: Fiscal Years Ended September 30, Amount 2018 $ 87,000 2019 90,000 2020 93,000 Total lease commitments $ 270,000 |
10. RELATED PARTY TRANSACTIONS
10. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Buying Agency and Supply Agreement On March 12, 2012, the Company entered into a Buying Agency and Supply Agreement (the “Supply Agreement”) with Forward Industries Asia-Pacific Corporation, a British Virgin Islands corporation (“Forward China”). The Supply 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 Supply Agreement) in the Asia Pacific region. The Company purchases products at Forward China’s cost and also pays to Forward China a monthly service fee equal to the sum of: (i) $100,000; and (ii) 4% of “Adjusted Gross Profit”, which is defined as the selling price less the cost from Forward China. The amended Supply Agreement expires on September 8, 2018, subject to renewal. Terence Bernard Wise, Chief Executive Officer and Chairman 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 $1,435,000 (inclusive of the extension fee below) and $1,466,000 during the fiscal years ended September 30, 2017 and 2016, respectively, in service fees paid to Forward China, which are included as a component of cost of goods sold in the accompanying consolidated statements of operations and comprehensive income. During the fiscal year ended September 30, 2017, the Company received commissions from Forward China of $12,904, which is included in net revenues. As a result of the continued decrease in the Company’s net revenues, Forward China agreed to forgo its rights to the 4% portion of the service fee under the Supply Agreement beginning with the third fiscal quarter through the end of fiscal year 2017. On September 19, 2017, the Supply Agreement was amended whereby the Company agreed to pay Forward China $70,000 in order to extend the Supply Agreement for an additional six months to March 8, 2019. In addition, the 4% of Adjusted Gross Profit was reinstated for the fourth quarter of Fiscal 2017. |
11. LEGAL PROCEEDINGS
11. LEGAL PROCEEDINGS | 12 Months Ended |
Sep. 30, 2017 | |
Legal Matters and Contingencies [Abstract] | |
LEGAL PROCEEDINGS | From time to time, the Company may become a party to other legal actions or proceedings in the ordinary course of its business. As of September 30, 2017, 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. |
12. 401(K) PLAN
12. 401(K) PLAN | 12 Months Ended |
Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |
401(K) PLAN | The Company maintains a 401(k) benefit plan allowing eligible United States-based employees to contribute a portion of their salary in an amount up to the annual maximum amounts as set periodically by the Internal Revenue Service. In accordance with applicable Safe Harbor provisions, the Company made matching contributions of approximately $25,000 and $37,000 during the fiscal years ended September 30, 2017 and 2016, respectively, which are reflected in the accompanying consolidated statements of operations and comprehensive income. The Company’s contributions vest immediately. |
13. OPERATING SEGMENT INFORMATI
13. OPERATING SEGMENT INFORMATION | 12 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENT INFORMATION | The Company reports and manages its operations based on a single operating segment: the design and distribution of carry and protective solutions, primarily for hand held electronic devices. Products designed and distributed by this segment include carrying cases and other accessories for medical monitoring and diagnostic kits, portable consumer electronic devices (such as smartphones, tablets, personnel computers, notebooks, and GPS devices), and a variety of other portable electronic and non-electronic products (such as firearms, sporting, and other recreational products). This segment operates in geographic regions that include the EMEA Region, the Americas and the APAC Region. Geographic regions are defined by reference primarily to the location of the customer or its contract manufacturer. Revenues from External Customers The following table presents net revenues by geographic region. (dollars in thousands) For the Fiscal Years Ended September 30, 2017 2016 EMEA Region: Germany $ 4,487 $ 4,807 Poland 4,215 4,690 Other 580 436 Total EMEA Region 9,282 9,933 Americas: United States 7,755 7,318 Other 15 15 Total Americas 7,770 7,333 APAC Region: Hong Kong 5,313 8,322 Malaysia 825 448 Taiwan 816 712 Other 759 732 Total APAC Region 7,713 10,214 Total Net Revenues $ 24,765 $ 27,480 Long-Lived Assets Identifiable long-lived assets, consisting predominately of property, plant and equipment, are presented net of accumulated depreciation and amortization and segregated by geographic region as follows: (dollars in thousands) September 30, 2017 2016 Americas $ 21 $ 43 APAC Region - - EMEA Region - - Total long-lived assets (net) $ 21 $ 43 Supplier Concentration The Company procures all its supply of carrying solutions products from independent suppliers in China through Forward China. Depending on the product, Forward China may require several different suppliers to furnish component parts or pieces. The Company purchased approximately 100% of its OEM products from Forward China in Fiscal 2017 and 2016. Major Customers The following customers or their affiliates or contract manufacturers accounted for more than ten percent of the Company’s net revenues, by geographic region, and in total. For the Fiscal Year Ended September 30, 2017 EMEA Region Americas APAC Region Total Company Diabetic Products Customer A 46% 28% - 26.3% Diabetic Products Customer B 36% 34% - 24.2% Diabetic Products Customer C - - 69% 21.5% Diabetic Products Customer D 10% 21% 3% 11.2% Totals 92% 83% 72% 83.2% For the Fiscal Year Ended September 30, 2016 EMEA Region Americas APAC Region Total Company Diabetic Products Customer A 45% 31% - 31.0% Diabetic Products Customer B 33% 24% 1% 24.5% Diabetic Products Customer C 2% - 81% 18.7% Diabetic Products Customer D 14% 25% 4% 13.3% Totals 94% 80% 86% 87.5% Four customers (including their affiliates or contract manufacturers) accounted for approximately 81% and 83% of the Company's accounts receivable at September 30, 2017 and 2016, respectively. |
2. ACCOUNTING POLICIES (Policie
2. ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly owned subsidiaries (Forward US and Forward Switzerland). All significant intercompany transactions and balances have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at September 30, 2017 and 2016. The Company maintains its cash in bank and financial institution deposits in the United States (that at times may exceed federally insured limits of $250,000 per financial institution) and Switzerland. At September 30, 2017 and 2016, there were deposits totaling approximately $4.4 million (which includes $1.4 million in a foreign bank) and $4.5 million (which includes $2.7 million in a foreign bank), respectively, held in excess of federally insured limits. Historically, we have not experienced any losses due to such cash concentrations. |
Accounts Receivable | Accounts Receivable Accounts receivable consist of unsecured trade accounts with customers or their contract manufacturers. The Company performs periodic credit evaluations of its customers including an evaluation of days outstanding, payment history, recent payment trends, and perceived creditworthiness, and believes that adequate allowances for any uncollectible receivables are maintained. Credit terms to customers generally range from net thirty (30) days to net one hundred twenty (120) days. The Company has not historically experienced significant credit or collection problems with its OEM customers or their contract manufacturers. At September 30, 2017 and 2016, no allowance for doubtful accounts relating to the Company’s accounts receivable was deemed necessary. |
Inventories | Inventories Inventories consist primarily of finished goods and are stated at the lower of cost (determined by the first-in, first-out method) or market. Based on management’s estimates, an allowance is made to reduce excess, obsolete, or otherwise un-saleable inventories to net realizable value. The allowance is established through charges to cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. As reserved inventory is disposed of, the Company charges off the associated allowance. In determining the adequacy of the allowance, management’s estimates are based upon several factors, including analyses of inventory levels, historical loss trends, sales history and projections of future sales demand. The Company’s estimates of the allowance may change from time to time based on management’s assessments, and such changes could be material. At September 30, 2017 and 2016, there was no allowance for obsolete inventory. |
Property and Equipment | Property and Equipment Property and equipment consists of furniture, fixtures, and equipment and leasehold improvements and are recorded at cost. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives for furniture, fixtures and equipment ranges from three to five years. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. |
Leases | Leases The Company enters into various lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Leases may contain initial periods of free rent and/or periodic escalations. When such items are included in a lease agreement, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a deferred rent liability. The Company expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. |
Income Taxes | Income Taxes The Company accounts for its income taxes in accordance with accounting principles generally accepted in the United States of America, 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 carryforwards to the extent that realization of these benefits is more likely than not. The Company periodically evaluates the realizability of its net deferred tax assets (See Note 7 – Income Taxes). The Company’s policy is to account for interest and penalties relating to income taxes, if any, in “income tax expense” in its consolidated statements of operations and comprehensive income and include accrued interest and penalties within “accrued liabilities” in its consolidated balance sheets, if applicable. For fiscal years ended September 30, 2017 and 2016, no income tax related interest or penalties were assessed or recorded. |
Revenue Recognition | Revenue Recognition The Company generally recognizes revenue from product sales to its customers when: (i) 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); (ii) persuasive evidence of an arrangement exists; (iii) the Company has no continuing obligations to the customer; and (iv) collection of the related accounts receivable is reasonably assured. The Company defers revenue when it receives consideration before achieving the criterion previously mentioned. |
Shipping and Handling Fees | Shipping and Handling Fees The Company includes shipping and handling fees billed to customers in net revenues and the related transportation costs in cost of goods sold. |
Foreign Currency Transactions | Foreign Currency Transactions Foreign currency transactions may generate receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. Fluctuations in exchange rates between such foreign currency and the functional currency increase or decrease the expected amount of functional currency cash flows upon settlement of the transaction. These increases or decreases in expected functional currency cash flows are foreign currency transaction gains or losses that are included in “other income (expense)” in the accompanying consolidated statements of operations and comprehensive income. The approximate net losses from foreign currency transactions were approximately $29,000 and $16,000 for the fiscal years ended September 30, 2017 and 2016, respectively. Such foreign currency transaction losses were primarily the result of Euro denominated revenues from certain customers. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, which is included as a component of shareholders’ equity, represents translation adjustments related to the Company’s foreign subsidiary. As a result of the dissolution of certain foreign subsidiaries, the related accumulated other comprehensive loss was reclassified out of shareholders’ equity. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses and other current liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. |
Share-Based Compensation Expense | Share-Based Compensation Expense The Company recognizes employee and director share-based compensation in its consolidated statements of operations and comprehensive income 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. 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 (See Note 6 - Share-Based Compensation). |
Recent Accounting Pronouncements | R ecent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of fiscal 2019 and plans to apply the full retrospective approach. Because the Company's primary source of revenues is from the sale of finished goods, the Company does not anticipate that the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements, disclosures or processes. In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Before this new standard, there was minimal guidance in U.S. GAAP specific to going concern. Under the new standard, disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. The new standard applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. The Company adopted ASU 2014-15 in the fourth quarter of fiscal 2017. The adoption of ASU 2014-15 did not have a material impact on the Company’s 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, first-out (“LIFO”). This ASU was 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 adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. 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 was 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. Early adoption is permitted. The Company adopted ASU 2015-17 in the fourth quarter of fiscal 2017. The adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. This ASU requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented. The new standard is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-09 in the fourth quarter of fiscal 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This ASU is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. Adoption of this ASU is prospective. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated financial statements. |
3. PROPERTY AND EQUIPMENT (Tabl
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | September 30, 2017 2016 Furniture, fixtures and equipment $ 333,748 $ 333,748 Leasehold improvements 42,020 42,020 Property and equipment, cost 375,768 375,768 Less: accumulated depreciation and amortization (355,110 ) (332,738 ) Property and equipment, net $ 20,658 $ 43,030 |
4. ACCRUED EXPENSES AND OTHER22
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other accrued liabilities | September 30, 2017 2016 Deferred revenue $ 169,642 $ 309,571 Personnel cost 129,582 256,144 Insurance payable 53,240 - Other 30,295 22,026 Accrued expenses and other current liabilities $ 382,759 $ 587,741 |
6. SHARE-BASED COMPENSATION (Ta
6. SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | 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 (25,000 ) 0.67 Expired (20,000 ) 6.02 Outstanding, September 30, 2016 266,000 2.27 Granted - Exercised - Forfeited (10,000 ) 3.73 Expired (10,000 ) 2.85 Outstanding, September 30, 2017 246,000 $ 2.19 3.9 $ 33,700 Exercisable, September 30, 2017 223,498 $ 2.35 3.5 $ 20,499 |
Schedule of option activity by exericse price | 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 $ 1.00 97,500 $ 1.11 5.3 74,998 $2.00 to $2.99 2.41 86,000 2.41 2.1 86,000 $3.00 to $3.79 3.74 62,500 3.74 3.4 62,500 246,000 3.5 223,498 |
Schedule restricted stock option activity | 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 141,817 1.43 202,521 Vested (244,166 ) 0.92 (224,758 ) Forfeited (1,666 ) 1.67 (2,782 ) Non-vested, September 30, 2016 159,317 1.29 205,146 Granted 140,000 1.07 149,800 Vested (139,317 ) 1.38 (192,346 ) Forfeited - - - Non-vested, September 30, 2017 160,000 $ 1.02 $ 162,600 |
7. INCOME TAXES (Tables)
7. INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision | For the Fiscal Years Ended September 30, 2017 2016 Current: Federal $ - $ - State - - Foreign - - Deferred: Federal 234,521 74,467 State 13,795 10,951 Foreign (21,861 ) 127,454 226,455 212,872 Change in valuation allowance (226,455 ) (212,872 ) Income tax provision (benefit) $ - $ - |
Schedule of deferred income taxes | September 30, 2017 2016 Deferred tax assets: Net operating losses $ 3,522,733 $ 3,689,028 Capital loss carryforwards 354,272 383,795 Share-based compensation 127,821 155,180 Alternative minimum tax credit 99,757 99,757 Excess tax over book basis in inventory 49,032 85,573 Excess tax over book basis in fixed assets 1,254 - 4,154,869 4,413,333 Valuation allowance (4,114,043 ) (4,340,498 ) Net deferred tax assets 40,826 72,835 Deferred tax liabilities: Prepaid insurance (40,826 ) (59,599 ) Excess book over tax basis in fixed assets - (13,236 ) (40,826 ) (72,835 ) Total $ - $ - |
Reconciliation of effective tax rate | For the Fiscal Years Ended September 30, 2017 2016 US federal statutory rate 34.0% 34.0% State tax rate, net of federal benefit (0.2%) 5.0% Permanent differences: Share-based compensation 2.5% (8.3%) Other (0.6%) 0.4% Foreign rate differential (27.1%) (13.3%) Other 34.3% 17.3% Change in valuation allowance (42.9%) (35.1%) Income tax provision (benefit) 0.0% 0.0% |
8. EARNINGS PER SHARE (Tables)
8. EARNINGS PER SHARE (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of income (loss) per share | For the Fiscal Years Ended September 30, 2017 2016 Numerator: Net income $ 579,346 $ 606,562 Denominator: Weighted average shares outstanding - basic 8,727,322 8,521,188 Effects of dilutive securities: Assumed exercise of stock options, treasury stock method 21,179 28,289 Assumed vesting of restricted stock, treasury stock method 74,558 126,106 Weighted average dilutive potential common shares 95,737 154,395 Weighted average shares outstanding - diluted 8,823,059 8,675,583 Basic earnings per share $ 0.07 $ 0.07 Diluted earnings per share $ 0.07 $ 0.07 |
Schedule of antidilutive securities excluded | For the Fiscal Years Ended September 30, 2017 2016 Options 188,500 188,500 Warrants 723,846 723,846 Total potentially dilutive shares 912,346 912,346 |
9. COMMITMENTS AND CONTINGENC26
9. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future lease commitments | Fiscal Years Ended September 30, Amount 2018 $ 87,000 2019 90,000 2020 93,000 Total lease commitments $ 270,000 |
13. OPERATING SEGMENT INFORMA27
13. OPERATING SEGMENT INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Revenues from External Customers | (dollars in thousands) For the Fiscal Years Ended September 30, 2017 2016 EMEA Region: Germany $ 4,487 $ 4,807 Poland 4,215 4,690 Other 580 436 Total EMEA Region 9,282 9,933 Americas: United States 7,755 7,318 Other 15 15 Total Americas 7,770 7,333 APAC Region: Hong Kong 5,313 8,322 Malaysia 825 448 Taiwan 816 712 Other 759 732 Total APAC Region 7,713 10,214 Total Net Revenues $ 24,765 $ 27,480 |
Schedule of Long-Lived Assets | (dollars in thousands) September 30, 2017 2016 Americas $ 21 $ 43 APAC Region - - EMEA Region - - Total long-lived assets (net) $ 21 $ 43 |
Schedule of concentration percentages | For the Fiscal Year Ended September 30, 2017 EMEA Region Americas APAC Region Total Company Diabetic Products Customer A 46% 28% - 26.3% Diabetic Products Customer B 36% 34% - 24.2% Diabetic Products Customer C - - 69% 21.5% Diabetic Products Customer D 10% 21% 3% 11.2% Totals 92% 83% 72% 83.2% For the Fiscal Year Ended September 30, 2016 EMEA Region Americas APAC Region Total Company Diabetic Products Customer A 45% 31% - 31.0% Diabetic Products Customer B 33% 24% 1% 24.5% Diabetic Products Customer C 2% - 81% 18.7% Diabetic Products Customer D 14% 25% 4% 13.3% Totals 94% 80% 86% 87.5% |
2. ACCOUNTING POLICIES (Details
2. ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash equivalents | $ 0 | $ 0 |
Cash held in excess of FDIC insurance limits | 4,400,000 | 4,500,000 |
Allowance for doubtful accounts | 0 | 0 |
Allowance for obsolete inventory | 0 | 0 |
Income tax penalties and interest | 0 | 0 |
Loss from foreign currency transactions | (29,000) | (16,000) |
Foreign Bank [Member] | ||
Cash held in excess of FDIC insurance limits | $ 1,400,000 | $ 2,700,000 |
3. PROPERTY AND EQUIPMENT (Deta
3. PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Property, Plant and Equipment [Abstract] | ||
Furniture, fixtures and equipment | $ 333,748 | $ 333,748 |
Leasehold improvements | 42,020 | 42,020 |
Property and equipment, cost | 375,768 | 375,768 |
Less: accumulated depreciation and amortization | (355,110) | (332,738) |
Property and equipment, net | $ 20,658 | $ 43,030 |
3. PROPERTY AND EQUIPMENT (De30
3. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 22,372 | $ 52,754 |
4. ACCRUED EXPENSES AND OTHER31
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Payables and Accruals [Abstract] | ||
Deferred revenue | $ 169,642 | $ 309,571 |
Personnel cost | 129,582 | 256,144 |
Insurance payable | 53,240 | 0 |
Other | 30,295 | 22,026 |
Accrued expenses and other current liabilities | $ 382,759 | $ 587,741 |
5. SHAREHOLDERS' EQUITY (Detail
5. SHAREHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | 181 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 24, 2017 | |
Common Stock | |||
Temporary Equity [Line Items] | |||
Stock repurchased, shares | 0 | 224,690 | |
Stock repurchased, amount | $ 0 | $ 487,000 | |
Blank Check Preferred Stock [Member] | |||
Temporary Equity [Line Items] | |||
Shares authorized for issuance | 4,000,000 | ||
Series A Preferred Stock [Member] | |||
Temporary Equity [Line Items] | |||
Shares authorized for issuance | 100,000 | ||
Restricted Stock [Member] | |||
Temporary Equity [Line Items] | |||
Stock repurchased, shares | 0 | 1,076 | |
Stock repurchased, amount | $ 0 | $ 2,000 |
6. SHARE-BASED COMPENSATION (De
6. SHARE-BASED COMPENSATION (Details - Option activity) - Options [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Number of Options | ||
Shares, Outstanding at Beginning | 266,000 | 311,000 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 0 | 0 |
Shares, Forfeited | (10,000) | (25,000) |
Shares, Outstanding at Ending | 246,000 | 266,000 |
Shares, Exercisable | 223,498 | |
Weighted Average Exercise Price | ||
Weighted average exercise price, Outstanding at Beginning | $ 2.27 | $ 2.39 |
Weighted average exercise price, Granted | ||
Weighted average exercise price, Exercised | ||
Weighted average exercise price, Forfeited | 3.73 | 0.67 |
Weighted average exercise price, Expired | 2.85 | 6.02 |
Weighted average exercise price, Outstanding at Ending | 2.19 | $ 2.27 |
Weighted average exercise price, Exercisable | $ 2.35 | |
Weighted Average Remaining life In Years | ||
Weighted average remaining contractual term (Years), Outstanding | 3 years 10 months 24 days | |
Weighted average remaining contractual term (Years), Exercisable | 3 years 6 months | |
Intrinsic Value | ||
Aggregate intrinsic value, Outstanding | $ 33,700 | |
Aggregate intrinsic value, Exercisable | $ 20,499 |
6. SHARE-BASED COMPENSATION (34
6. SHARE-BASED COMPENSATION (Details - Options by exercise price) - $ / shares | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
$0.64 to $1.99 [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 | $ 1 | |||
Options Outstanding, Outstanding Number of Options | 97,500 | |||
Options Exercisable, Weighted average exercise price | $ 1.11 | |||
Options Exercisable, Weighted Average Remaining Life In Years | 5 years 3 months 18 days | |||
Options Exercisable, Exercisable Number of Options | 74,998 | |||
$2.00 to $2.99 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price lower limit | $ 2 | |||
Exercise price upper limit | 2.99 | |||
Options Outstanding, Weighted average exercise price | $ 2.41 | |||
Options Outstanding, Outstanding Number of Options | 86,000 | |||
Options Exercisable, Weighted average exercise price | $ 2.41 | |||
Options Exercisable, Weighted Average Remaining Life In Years | 2 years 1 month 6 days | |||
Options Exercisable, Exercisable Number of Options | 86,000 | |||
$3.00 to $3.79 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price lower limit | $ 3 | |||
Exercise price upper limit | 3.79 | |||
Options Outstanding, Weighted average exercise price | $ 3.74 | |||
Options Outstanding, Outstanding Number of Options | 62,500 | |||
Options Exercisable, Weighted average exercise price | $ 3.74 | |||
Options Exercisable, Weighted Average Remaining Life In Years | 3 years 4 months 24 days | |||
Options Exercisable, Exercisable Number of Options | 62,500 | |||
Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options Outstanding, Weighted average exercise price | $ 2.19 | $ 2.27 | $ 2.39 | |
Options Outstanding, Outstanding Number of Options | 246,000 | |||
Options Exercisable, Weighted Average Remaining Life In Years | 3 years 6 months | |||
Options Exercisable, Exercisable Number of Options | 223,498 |
6. SHARE-BASED COMPENSATION (35
6. SHARE-BASED COMPENSATION (Details - Restricted stock activity) - Restricted Stock [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Number of Shares | ||
Shares, Non-vested balance | 159,317 | 263,332 |
Shares granted | 202,521 | 141,817 |
Shares vested | (139,317) | (244,166) |
Shares forfeited | (1,666) | |
Shares, Non-vested balance | 160,000 | 159,317 |
Weighted Average Grant Date Fair Value | ||
Weighted average grant date fair value, Non-vested balance | $ 1.29 | $ .87 |
Weighted average grant date fair value, granted | 1.07 | 1.43 |
Weighted average grant date fair value, vested | 1.38 | 0.92 |
Weighted average grant date fair value, forfeited | 1.67 | |
Weighted average grant date fair value, Non-vested balance | $ 1.02 | $ 1.29 |
Total Grant Date Fair Value | ||
Total grant date fair value, Non-vested balance | $ 205,146 | $ 230,165 |
Total grant date fair value, granted | 149,800 | 202,521 |
Total grant date fair value, vested | (192,346) | (224,758) |
Total grant date fair value, forfeited | (2,782) | |
Total grant date fair value, Non-vested balance | $ 162,600 | $ 205,146 |
6. SHARE-BASED COMPENSATION (36
6. SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation expense | $ 155,013 | $ 236,070 |
Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation expense | 5,000 | $ 10,000 |
Options [Member] | Nonvested Stock Option Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 3,000 | |
Unrecognized compensation cost weighted average vesting period | 8 months 12 days | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 202,521 | 141,817 |
Share based compensation expense | $ 150,000 | $ 226,000 |
Unrecognized compensation cost | $ 85,000 | |
Unrecognized compensation cost weighted average vesting period | 4 months 24 days | |
2011 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance | 850,000 | |
Shares available for grant | 321,479 | |
2011 Plan [Member] | Restricted Stock [Member] | Directors [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 140,000 | |
Restricted stock grant date fair value | $ 149,800 | |
2007 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance | 800,000 | |
Shares available for grant | 17,823 | |
2007 Plan [Member] | Restricted Stock [Member] | Former Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 17,500 | |
Restricted stock grant date fair value | $ 19,775 | |
2007 Plan [Member] | Restricted Stock [Member] | Directors [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 124,317 | |
Restricted stock grant date fair value | $ 182,746 | |
1996 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options expired | 20,000 |
8. EARNINGS PER SHARE (Details
8. EARNINGS PER SHARE (Details - Diluted loss per share) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||
Net income | $ 579,346 | $ 606,562 |
Denominator: | ||
Weighted average shares outstanding - basic | 8,727,322 | 8,521,188 |
Effect of dilutive securities | ||
Assumed exercise of stock options, treasury stock method | 21,179 | 28,289 |
Assumed vesting of restricted stock, treasury stock method | 74,558 | 126,106 |
Dilutive potential common shares | 95,737 | 154,395 |
Weighted average shares outstanding - diluted | 8,823,059 | 8,675,583 |
Basic earnings per share | $ .07 | $ .07 |
Diluted earnings per share | $ .07 | $ .07 |
8. EARNINGS PER SHARE (Detail38
8. EARNINGS PER SHARE (Details - Antidilutive shares) - shares | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 912,346 | 912,346 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 188,500 | 188,500 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 723,846 | 723,846 |
7. INCOME TAXES (Details - Tax
7. INCOME TAXES (Details - Tax provision) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Deferred: | ||
Federal | 234,521 | 74,467 |
State | 13,795 | 10,951 |
Foreign | (21,861) | 127,454 |
Total deferred income tax expense | 226,455 | 212,872 |
Change in valuation allowance | (226,455) | (212,872) |
Income tax provision (benefit) | $ 0 | $ 0 |
7. INCOME TAXES (Details - Defe
7. INCOME TAXES (Details - Deferred tax) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Deferred tax assets: | ||
Net operating losses | $ 3,522,733 | $ 3,689,028 |
Capital loss carryforwards | 354,272 | 383,795 |
Share-based compensation | 127,821 | 155,180 |
Alternative minimum tax credit | 99,757 | 99,757 |
Excess tax over book basis in inventory | 49,032 | 85,573 |
Excess tax over book basis in fixed assets | 1,254 | 0 |
Total deferred tax assets | 4,154,869 | 4,413,333 |
Valuation allowance | (4,114,043) | (4,340,498) |
Net deferred tax assets | 40,826 | 72,835 |
Deferred tax liabilities: | ||
Prepaid insurance | (40,826) | (59,599) |
Excess book over tax basis in fixed assets | 0 | (13,236) |
Total deferred tax liabilities | (40,826) | (72,835) |
Net deferred tax assets and liabilities | $ 0 | $ 0 |
7. INCOME TAXES (Details - Ta41
7. INCOME TAXES (Details - Tax reconciliation) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
US federal statutory rate | 34.00% | 34.00% |
State tax rate, net of federal benefit | (0.20%) | 5.00% |
Permanent differences: | ||
Share-based compensation | 2.50% | (8.30%) |
Other | (0.60%) | 0.40% |
Foreign rate differential | (27.10%) | (13.30%) |
Other | 34.30% | 17.30% |
Change in valuation allowance | (42.90%) | (35.10%) |
Income tax provision (benefit) | 0.00% | 0.00% |
7. INCOME TAXES (Details narrat
7. INCOME TAXES (Details narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Unrecognized income tax benefits | $ 0 | $ 0 |
Deferred tax assets | 3,522,733 | 3,689,028 |
Foreign operating loss carryforward | 3,360,000 | 3,188,000 |
Capital loss carryforward | $ 984,000 | |
Capital loss carryforward expiration date | Dec. 31, 2020 | |
Deferred tax capital loss carryforward | $ 354,272 | 383,795 |
Forward Switzerland [Member] | ||
Net income | 627,000 | |
Federal [Member] | ||
Net operating loss carryforward | $ 9,268,000 | |
Operating loss beginning expiration date | Dec. 31, 2037 | |
Deferred tax assets | $ 3,151,000 | |
State [Member] | ||
Net operating loss carryforward | 1,744,000 | |
Deferred tax assets | $ 69,000 | |
Foreign Tax [Member] | ||
Operating loss beginning expiration date | Dec. 31, 2024 | |
Deferred tax assets | $ 302,000 | $ 281,000 |
9. COMMITMENTS AND CONTINGENC43
9. COMMITMENTS AND CONTINGENCIES (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 87,000 |
2,019 | 90,000 |
2,020 | 93,000 |
Total lease commitments | $ 270,000 |
9. COMMITMENTS AND CONTINGENC44
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 88,000 | $ 107,000 |
10. RELATED PARTY TRANSACTIONS
10. RELATED PARTY TRANSACTIONS (Details Narrative) - Forward China [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Related Party Transaction [Line Items] | ||
Service fees paid | $ 1,435,000 | $ 1,466,000 |
Commissions earned | 12,904 | |
Supply agreement fee | $ 70,000 |
12. 401(K) PLAN (Details Narrat
12. 401(K) PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Retirement Benefits [Abstract] | ||
Pension contribution | $ 25,000 | $ 37,000 |
13. OPERATING SEGMENT INFORMA47
13. OPERATING SEGMENT INFORMATION (Details - Revenues) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | $ 24,764,613 | $ 27,479,896 |
EMEA Region [Member] | ||
Revenues | 9,282,000 | 9,933,000 |
EMEA Region [Member] | Germany [Member] | ||
Revenues | 4,487,000 | 4,807,000 |
EMEA Region [Member] | Poland [Member] | ||
Revenues | 4,215,000 | 4,690,000 |
EMEA Region [Member] | Other [Member] | ||
Revenues | 580,000 | 436,000 |
Americas [Member] | ||
Revenues | 7,770,000 | 7,333,000 |
Americas [Member] | United States [Member] | ||
Revenues | 7,755,000 | 7,318,000 |
Americas [Member] | Other [Member] | ||
Revenues | 15,000 | 15,000 |
APAC Region [Member] | ||
Revenues | 7,713,000 | 10,214,000 |
APAC Region [Member] | Hong Kong [Member] | ||
Revenues | 5,313,000 | 8,322,000 |
APAC Region [Member] | Malaysia [Member] | ||
Revenues | 825,000 | 448,000 |
APAC Region [Member] | Taiwan [Member] | ||
Revenues | 816,000 | 712,000 |
APAC Region [Member] | Other [Member] | ||
Revenues | $ 759,000 | $ 732,000 |
13. OPERATING SEGMENT INFORMA48
13. OPERATING SEGMENT INFORMATION (Details - Long lived assets) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Property and equipment, net | $ 20,658 | $ 43,030 |
Americas [Member] | ||
Property and equipment, net | 21,000 | 43,000 |
APAC Region [Member] | ||
Property and equipment, net | 0 | 0 |
EMEA Region [Member] | ||
Property and equipment, net | $ 0 | $ 0 |
13. OPERATING SEGMENT INFORMA49
13. OPERATING SEGMENT INFORMATION (Details - Concentrations) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Sales Revenue, Net [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 83.20% | 87.50% |
Sales Revenue, Net [Member] | EMEA Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 92.00% | 94.00% |
Sales Revenue, Net [Member] | Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 83.00% | 80.00% |
Sales Revenue, Net [Member] | APAC Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 72.00% | 86.00% |
Sales Revenue, Net [Member] | Customer A [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 26.30% | 31.00% |
Sales Revenue, Net [Member] | Customer A [Member] | EMEA Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 46.00% | 45.00% |
Sales Revenue, Net [Member] | Customer A [Member] | Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 28.00% | 31.00% |
Sales Revenue, Net [Member] | Customer A [Member] | APAC Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 0.00% | 0.00% |
Sales Revenue, Net [Member] | Customer B [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 24.20% | 24.50% |
Sales Revenue, Net [Member] | Customer B [Member] | EMEA Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 36.00% | 33.00% |
Sales Revenue, Net [Member] | Customer B [Member] | Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 34.00% | 24.00% |
Sales Revenue, Net [Member] | Customer B [Member] | APAC Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 0.00% | 1.00% |
Sales Revenue, Net [Member] | Customer C [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 21.50% | 18.70% |
Sales Revenue, Net [Member] | Customer C [Member] | EMEA Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 0.00% | 2.00% |
Sales Revenue, Net [Member] | Customer C [Member] | Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 0.00% | 0.00% |
Sales Revenue, Net [Member] | Customer C [Member] | APAC Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 69.00% | 81.00% |
Sales Revenue, Net [Member] | Customer D [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 11.20% | 13.30% |
Sales Revenue, Net [Member] | Customer D [Member] | EMEA Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 10.00% | 14.00% |
Sales Revenue, Net [Member] | Customer D [Member] | Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 21.00% | 25.00% |
Sales Revenue, Net [Member] | Customer D [Member] | APAC Region [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 3.00% | 4.00% |
Accounts Receivable [Member] | 4 Customers [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk | 81.00% | 83.00% |