Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 31, 2020 | Jan. 31, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Forward Industries, Inc. | |
Entity Central Index Key | 0000038264 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive data current | Yes | |
Entity File Number | 001-34780 | |
Entity Incorporation State Code | NY | |
Entity Common Stock, Shares Outstanding | 9,886,351 | |
Entity Current Reporting Status | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Current assets: | ||
Cash | $ 2,332,324 | $ 2,924,627 |
Accounts receivable, net | 7,729,140 | 7,602,316 |
Inventories | 1,257,397 | 1,275,694 |
Prepaid expenses and other current assets | 339,292 | 419,472 |
Total current assets | 11,658,153 | 12,222,109 |
Property and equipment, net | 205,057 | 215,323 |
Intangible assets, net | 1,478,227 | 1,531,415 |
Goodwill | 1,758,682 | 1,758,682 |
Operating lease right of use assets, net | 3,436,130 | 3,512,042 |
Other assets | 72,251 | 116,697 |
Total assets | 18,608,500 | 19,356,268 |
Current liabilities: | ||
Line of credit | 1,000,000 | 1,000,000 |
Note payable to Forward China | 1,600,000 | 1,600,000 |
Accounts payable | 212,928 | 197,022 |
Due to Forward China | 3,451,724 | 3,622,401 |
Deferred Income | 169,769 | 485,078 |
Current portion of notes payable | 114,894 | 983,395 |
Current portion of finance lease liability | 13,231 | 18,411 |
Current portion of deferred consideration | 0 | 45,000 |
Current portion of operating lease liability | 269,569 | 259,658 |
Accrued expenses and other current liabilities | 594,647 | 615,401 |
Total current liabilities | 7,426,762 | 8,826,366 |
Other liabilities: | ||
Notes payable, less current portion | 0 | 529,973 |
Operating lease liability, less current portion | 3,288,938 | 3,359,088 |
Finance lease liability, less current portion | 7,560 | 12,769 |
Deferred consideration - long-term portion | 60,000 | 45,000 |
Total other liabilities | 3,356,498 | 3,946,830 |
Total liabilities | 10,783,260 | 12,773,196 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 40,000,000 shares authorized; 9,886,351 and 9,883,851 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively | 98,863 | 98,838 |
Additional paid-in capital | 19,622,791 | 19,579,684 |
Accumulated deficit | (11,896,414) | (13,095,450) |
Total shareholders' equity | 7,825,240 | 6,583,072 |
Total liabilities and shareholders' equity | $ 18,608,500 | $ 19,356,268 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Sep. 30, 2020 |
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) | 9,886,351 | 9,883,851 |
Common stock, shares outstanding (in shares) | 9,886,351 | 9,883,851 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues, net | $ 9,717,603 | $ 8,392,854 |
Cost of sales | 7,454,717 | 6,672,845 |
Gross profit | 2,262,886 | 1,720,009 |
Sales and marketing expenses | 602,961 | 535,172 |
General and administrative expenses | 1,827,418 | 1,213,966 |
Loss from operations | (167,493) | (29,129) |
Gain on forgiveness of note payable | (1,356,570) | 0 |
Fair value adjustment of earn-out consideration | (30,000) | 0 |
Interest income | (22,747) | 0 |
Interest expense | 46,392 | 50,949 |
Other (income)/expense, net | (3,604) | 1,579 |
Income/(loss) before income taxes | 1,199,036 | (81,657) |
Provision for/(benefit from) income taxes | 0 | 0 |
Net income/(loss) | $ 1,199,036 | $ (81,657) |
Earnings/(loss) per share: | ||
Basic | $ 0.12 | $ (0.01) |
Diluted | $ 0.12 | $ (0.01) |
Weighted average common shares outstanding: | ||
Basic | 9,885,563 | 9,533,851 |
Diluted | 10,039,799 | 9,533,851 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Sep. 30, 2019 | 9,533,851 | |||
Beginning balance, value at Sep. 30, 2019 | $ 95,338 | $ 18,936,130 | $ (11,320,169) | $ 7,711,299 |
Share-based compensation | 33,179 | 33,179 | ||
Net income (loss) | (81,657) | (81,657) | ||
Ending balance, shares at Dec. 31, 2019 | 9,533,851 | |||
Ending balance, value at Dec. 31, 2019 | $ 95,338 | 18,969,309 | (11,401,826) | 7,662,821 |
Beginning balance, shares at Sep. 30, 2020 | 9,883,851 | |||
Beginning balance, value at Sep. 30, 2020 | $ 98,838 | 19,579,684 | (13,095,450) | 6,583,072 |
Share-based compensation | 41,457 | 41,457 | ||
Stock options exercised, shares | 2,500 | |||
Stock options exercised, value | $ 25 | 1,650 | 1,675 | |
Net income (loss) | 1,199,036 | 1,199,036 | ||
Ending balance, shares at Dec. 31, 2020 | 9,886,351 | |||
Ending balance, value at Dec. 31, 2020 | $ 98,863 | $ 19,622,791 | $ (11,896,414) | $ 7,825,240 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Activities: | ||
Net income (loss) | $ 1,199,036 | $ (81,657) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 41,457 | 33,179 |
Depreciation and amortization | 93,937 | 69,132 |
Bad debt expense (recovery) | 77,400 | (65,454) |
Gain on forgiveness of note payable | (1,356,570) | 0 |
Change in fair value of earn-out consideration | (30,000) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (204,224) | (560,096) |
Inventories | 18,297 | 508,360 |
Prepaid expenses and other current assets | 80,180 | (48,043) |
Other assets | 44,446 | 37,522 |
Accounts payable and due to Forward China | (154,771) | (546,061) |
Deferred income | (315,309) | (160,948) |
Operating lease liabilities | 15,673 | 9,681 |
Accrued expenses and other current liabilities | (20,755) | 20,357 |
Net cash used in operating activities | (511,203) | (784,028) |
Investing Activities: | ||
Purchases of property and equipment | (30,482) | (6,428) |
Net cash used in investing activities | (30,482) | (6,428) |
Financing Activities: | ||
Repayment of notes payable | (41,904) | (24,777) |
Proceeds from stock options exercised | 1,675 | 0 |
Repayments of finance leases | (10,389) | (8,771) |
Payment of deferred cash consideration | 0 | (200,000) |
Net cash provided by financing activities | (50,618) | (233,548) |
Net decrease in cash | (592,303) | (1,024,004) |
Cash at beginning of period | 2,924,627 | 3,092,813 |
Cash at end of period | 2,332,324 | 2,068,809 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 46,281 | 50,949 |
Cash paid for taxes | 50 | 303 |
Supplemental Disclosure of Non-Cash Information: | ||
Lease assets recorded upon adoption of ASC 842 | 0 | 3,648,582 |
Lease liabilities recorded upon adoption of ASC 842 | $ 0 | $ 3,729,341 |
1. OVERVIEW
1. OVERVIEW | 3 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OVERVIEW | NOTE 1 OVERVIEW Business Forward Industries, Inc. (“Forward”, “we” or the “Company”) is a fully integrated design, development and manufacturing solution provider for top tier medical and technology customers worldwide. As a result of the continued expansion of our design development capabilities through our wholly-owned subsidiaries, we are now able to introduce proprietary products to the market from concepts brought to us from a number of different sources, both inside and outside the Company. Impact of COVID-19 The outbreak of the COVID-19 virus impacted our results of operations. While the most significant impact was realized in Fiscal 2020, the virus had a less significant effect on our results of operations for the first quarter of Fiscal 2021. The business shutdowns resulting from the pandemic disrupted our supply chain and the manufacture or shipment of our products and have delayed the rollout of our smart-enabled retail products to big box retail stores. Additionally, demand for our design and development services was reduced or delayed in response to the pandemic. While revenues for the three months ended December 31, 2020 increased as compared to the three months ended December 31, 2019, they were lower than anticipated due to the impact of COVID-19 and the resulting economic conditions. The impact of lower than anticipated revenue was partially offset by a reduction in certain selling and travel related expenses resulting from government mandated stay-at-home orders and travel restrictions. The economy started to open in certain jurisdictions where the virus was considered under control. However, there continue to be areas with increased rates of infection that could cause government officials to enact more restrictions on how businesses operate. The future impacts of the pandemic and any resulting economic impact are largely unknown and could be significant. It is possible that the pandemic, the measures taken by the governments of countries affected and the resulting economic impact may negatively impact our results of operations, cash flows and financial position in future periods as well as that of our customers, including their ability to pay for our services and choosing to allocate their budgets to new or existing projects which may or may not require our services. The long-term financial impact on our business cannot be reasonably estimated at this time. As a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods. Refer to “Part II, Item 1A — Risk Factors” for a description of the material risks that the Company currently faces in connection with COVID-19. Until a vaccine and treatment are widely available, we expect business conditions to remain challenging. In response to these challenges, we will continue to focus on those factors that we can control: closely managing and controlling our expenses; aligning our design and development schedules with demand in a proactive manner as there are changes in market conditions to minimize our cash operating costs; and pursuing further improvements in the productivity and effectiveness of our development, selling and administrative activities. |
2. ACCOUNTING POLICIES
2. ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | NOTE 2 ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and all of its subsidiaries: Forward Industries (IN), Inc. (“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries UK Limited (“Forward UK”), Intelligent Product Solutions, Inc. (“IPS”) and Kablooe, Inc. (“Kablooe”). The terms “Forward”, “we” or the “Company” as used throughout this document are used to indicate Forward Industries, Inc. and all of its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The acquisition of Kablooe took place in August 2020 and its results of operations have been included in our condensed consolidated financial statements since the acquisition date. Accordingly, our results of operations for the three months ended December 31, 2020 include Kablooe’s results of operations, while our results of operations for the three months ended December 31, 2019 do not. Key terms of the acquisition are contained in our Form 10-K filed with the Securities and Exchange Commission on December 17, 2020. In the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the year ending September 30, 2021. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2020, and with the disclosures and risk factors presented therein. The September 30, 2020 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. Certain dollar amounts and percentages have been rounded to their approximate value. For the three months ended December 31, 2020, the Company generated net income of $1,199,000, and used $511,000 of cash flow in operating activities. The Company has an accumulated deficit of $11,896,000 at December 31, 2020. We believe our existing cash balance and working capital will be sufficient to meet our liquidity needs at least through February 28, 2022. Accounting Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. Revenue Recognition Distribution Segment The Company generally recognizes revenue in its distribution segment when: (i) finished goods are shipped to our distribution customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale, i.e., transfer of control); (ii) there are no other deliverables or performance obligations; and (iii) there are no further obligations to the customer after title to the goods has transferred. When the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The distribution segment had no contract liabilities at December 31, 2020. Contract liabilities at September 30, 2020 were $75,000 for the distribution segment. Design Segment The Company applies the “cost to cost” and “right to invoice” methods of revenue recognition to the contracts with customers in the design segment. The design segment typically engages in two types of contracts: (i) time and material and (ii) fixed price contracts. The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method. Revenues from fixed price contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations, or the “cost to cost” method. Revenues from fixed price contracts that contain specific deliverables are recognized when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted. Recognized revenues that will not be billed until a later date, or contract assets, are recorded as an asset and classified as a component of accounts receivable in the accompanying condensed consolidated balance sheets. Contract assets at December 31, 2020 and September 30, 2020 were $805,000 and $649,000, respectively. Contracts where collections to date have exceeded recognized revenues, or contract liabilities, are recorded as a liability and classified as a component of deferred income in the accompanying condensed consolidated balance sheets. Contract liabilities at December 31, 2020 and September 30, 2020 were $170,000 and $410,000, respectively, for the design segment. Goodwill Goodwill represents the future economic benefits of assets acquired in a business combination that are not individually identified or separately recognized. The Company’s goodwill resulted from its acquisitions of IPS in January 2018 and Kablooe in August 2020. The Company reviews goodwill for impairment at least annually, or more often if triggering events occur. The Company has two reporting units with goodwill (IPS and Kablooe) and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering event. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform the impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the Company will compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment charge is recognized. If the fair value of the reporting unit is less than its carrying value, an impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value. A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit and the implied fair value of goodwill. Based on management’s evaluation, there were no impairments to goodwill at September 30, 2020 and there were no triggering events leading to an interim impairment analysis at December 31, 2020. Intangible Assets Intangible assets include trademarks and customer relationships, which resulted from the acquisitions of IPS in Fiscal 2018 and Kablooe in Fiscal 2020 and are recorded based on their estimated fair value determined in conjunction with the purchase price allocations. These intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of our intangible assets, we must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, we may be required to record impairment charges related to our intangible assets. Management evaluated and concluded that there were no impairments of intangible assets at December 31, 2020. Income Taxes The Company recognizes future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards to the extent that realization of these benefits is more likely than not. At December 31, 2020, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets as it is not probable that such deferred tax assets will be realized. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book income tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards. During the three months ended December 31, 2020, the Company’s application for forgiveness of debt was submitted and approved for their loan received as part of the Payroll Protection Program (“PPP loan”) pursuant to the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The aggregate loan principal amount forgiven was $1,357,000. The total amount forgiven will not be recognized as taxable income pursuant to the CARES Act. Pursuant to the Consolidated Appropriations Act, 2021, which was enacted by Congress and signed into law by the President on December 27, 2020, all expenses utilizing funds from PPP loans will be deductible against taxable income. Fair Value Measurements We perform fair value measurements in accordance with the guidance provided by ASC 820, “Fair Value Measurement.” ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset's or liability's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: · Level 1: quoted prices in active markets for identical assets or liabilities; · Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or · Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Leases L ease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The Company has certain leases that may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease assets are shown as right of use assets and finance lease assets are a component of property and equipment on the condensed consolidated balance sheets. The current and long-term portions of operating and finance lease liabilities are shown separately as such on the condensed consolidated balance sheets. Business Combinations The Company allocates the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships and developed technology, discount rates and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820)” to improve the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In November 2019, the FASB issued ASU 2019-08, “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)” to provide guidance for share-based payment awards granted to a customer in conjunction with selling goods or services accounted for under Topic 606. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that provides clarity to and amends earlier guidance on this topic and would be effective concurrently with the adoption of such earlier guidance. This pronouncement is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 “ addressing customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract, which requires customers to apply internal-use software guidance to determine the implementation costs that are able to be capitalized. Capitalized implementation costs are required to be amortized over the term of the arrangement, beginning when the cloud computing arrangement is ready for its intended use. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance removes certain exceptions to the general principles in Topic 740 and provides consistent application of U.S. GAAP by clarifying and amending existing guidance. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of the updated guidance on its condensed consolidated financial statements. |
3. INTANGIBLE ASSETS
3. INTANGIBLE ASSETS | 3 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 3 INTANGIBLE ASSETS The Company’s intangible assets resulted from the acquisitions of Kablooe in August 2020 and IPS in January 2018 and are all held under the design segment of our business. Amortization expense related to intangible assets was $53,000 and $41,000 for the three months ended December 31, 2020 and 2019, respectively, which is included in general and administrative expenses on the condensed consolidated statements of operations. The Company’s intangible assets consist of the following: December 31, 2020 September 30, 2020 Trademark Customer Relationships Total Intangible Assets Trademark Customer Relationships Total Intangible Assets Gross carrying amount $ 585,000 $ 1,390,000 $ 1,975,000 $ 585,000 $ 1,390,000 $ 1,975,000 Less accumulated amortization (96,000 ) (401,000 ) (497,000 ) (86,000 ) (358,000 ) (444,000 ) Net carrying amount $ 489,000 $ 989,000 $ 1,478,000 $ 499,000 $ 1,032,000 $ 1,531,000 At December 31, 2020, estimated amortization expense for the Company’s intangible assets for each of the next five years and thereafter is as follows: Remainder of Fiscal 2021 $ 160,000 Fiscal 2022 213,000 Fiscal 2023 213,000 Fiscal 2024 213,000 Fiscal 2025 213,000 Thereafter 466,000 Total $ 1,478,000 |
4. FAIR VALUE MEASUREMENTS
4. FAIR VALUE MEASUREMENTS | 3 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 4 FAIR VALUE MEASUREMENTS The deferred consideration of $60,000 and $90,000 at December 31, 2020 and September 30, 2020, respectively, represents the fair value of the contingent earnout consideration related to the acquisition of Kablooe. The current and non-current portions of this liability are shown in the corresponding categories on the condensed consolidated balance sheets in each period presented. During the three months ended December 31, 2020, the Company reduced this liability from $90,000 to $60,000 based on the low likelihood of Kablooe reaching the first year’s earnings target. The following table presents the placement in the fair value hierarchy and summarizes the changes in fair value of the aforementioned liability for the three months ended December 31, 2020: Fair value measurement at reporting date using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Balance (Level 1) (Level 2) (Level 3) September 30, 2020 $ 90,000 $ – $ – $ 90,000 Decrease in fair value of Kablooe contingent earnout consideration (30,000 ) – – (30,000 ) December 31, 2020 $ 60,000 $ – $ – $ 60,000 |
5. SEGMENT INFORMATION
5. SEGMENT INFORMATION | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 5 SEGMENT INFORMATION The Company has two reportable segments: distribution and design. The distribution segment sources and distributes carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic devices as well as smart-enabled and other products. The design segment provides a full spectrum of hardware and software product design and engineering services. We measure the performance of our operating segments based upon revenue and operating income or loss. Operating income/(loss) and net income/(loss) before income taxes are shown in the table below: For the Three Months Ended December 31, 2020 2019 Revenues, net Distribution $ 5,606,000 $ 4,696,000 Design 4,112,000 3,697,000 Total revenues, net $ 9,718,000 $ 8,393,000 Cost of sales Distribution $ 4,880,000 $ 4,093,000 Design 2,575,000 2,580,000 Total cost of sales $ 7,455,000 $ 6,673,000 Income/(loss) from operations Distribution $ (344,000 ) $ (443,000 ) Design 177,000 414,000 Total income/(loss) from operations $ (167,000 ) $ (29,000 ) Other (income)/expense, net Distribution $ (1,000 ) $ 34,000 Design (1,365,000 ) 19,000 Total other (income)/expense, net $ (1,366,000 ) $ 53,000 Income/(loss) before income taxes Distribution $ (343,000 ) $ (477,000 ) Design 1,542,000 395,000 Total income/(loss) before income taxes $ 1,199,000 $ (82,000 ) The following table presents total assets by operating segment: December 31, 2020 September 30, 2020 Distribution $ 7,808,000 $ 8,289,000 Design 10,801,000 11,067,000 Total $ 18,609,000 $ 19,356,000 |
6. SHARE-BASED COMPENSATION
6. SHARE-BASED COMPENSATION | 3 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 6 SHARE-BASED COMPENSATION Stock Options There were no options granted during the three months ended December 31, 2020 or 2019. During the three months ended December 31, 2020, the Company issued 2,500 shares of its common stock pursuant to the exercise of stock options at an exercise price of $0.67 per share for aggregate cash proceeds of $2,000. The Company recognized compensation expense for stock option awards of $41,000 and $33,000 during the three months ended December 31, 2020 and 2019, respectively, in its condensed consolidated statements of operations. At December 31, 2020, there was $34,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.6 years. |
7. EARNINGS_(LOSS) PER SHARE
7. EARNINGS/(LOSS) PER SHARE | 3 Months Ended |
Dec. 31, 2020 | |
Earnings/(loss) per share: | |
EARNINGS/(LOSS) PER SHARE | NOTE 7 EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted earnings/(loss) per share data is computed using the weighted average number of common and dilutive common equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method. A reconciliation of basic and diluted earnings/(loss) per share is as follows: For the Three Months Ended December 31, 2020 2019 Numerator: Net income/(loss) $ 1,199,000 $ (82,000 ) Denominator: Weighted-average common shares outstanding 9,886,000 9,534,000 Dilutive common share equivalents 154,000 – Weighted-average diluted shares outstanding 10,040,000 9,534,000 Earnings/(loss) per share: Basic $ 0.12 $ (0.01 ) Diluted $ 0.12 $ (0.01 ) The following securities were excluded from the calculation of diluted earnings/(loss) per share in each period because their inclusion would have been anti-dilutive: For the Three Months Ended December 31, 2020 2019 Options 136,000 811,000 Warrants 151,000 151,000 Total potentially dilutive shares 287,000 962,000 |
8. CONCENTRATIONS
8. CONCENTRATIONS | 3 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 8 CONCENTRATIONS Concentration of Revenues and Accounts Receivable For the three months ended December 31, 2020 and 2019, the Company had significant customers whose individual percentage of the Company’s total revenues was 10% or greater. The concentrations of revenues and accounts receivable for each reportable segment are as follows: Distribution Segment Revenues Concentration For the Three Months Ended December 31, 2020 2019 Customer A 28% 34% Customer B 16% 13% Customer C 23% 31% Customer D 12% 5% Totals 79% 83% Design Segment Revenues Concentration For the Three Months Ended December 31, 2020 2019 Customer 1 11% 10% Customer 2 12% 10% Customer 3 8% 23% Customer 5 1% 12% Customer 6 15% 0% Customer 7 11% 0% Total 58% 55% At December 31, 2020 and September 30, 2020, concentrations of accounts receivable with significant customers representing 10% or greater of segment accounts receivable were as follows: Distribution Segment Accounts Receivable Concentration December 31, 2020 September 30, 2020 Customer A 27% 23% Customer B 20% 22% Customer C 22% 20% Customer D 20% 17% Totals 89% 82% Design Segment Accounts Receivable Concentration December 31, 2020 September 30, 2020 Customer 1 21% 24% Customer 4 15% 14% Customer 5 3% 10% Customer 7 14% 8% Totals 53% 56% |
9. RELATED PARTY TRANSACTIONS
9. RELATED PARTY TRANSACTIONS | 3 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 RELATED PARTY TRANSACTIONS Buying Agency and Supply Agreement The Company has a Buying Agency and Supply Agreement (the “Supply Agreement”) with Forward Industries Asia-Pacific Corporation (“Forward China”). The Supply Agreement 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 Supply Agreement expires October 22, 2023. Terence Wise, Chief Executive Officer and Chairman of the Company, is the owner of Forward China. In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owns more than 5% of the Company’s common stock. The Company recorded service fees to Forward China of $343,000 and $338,000 during the three months ended December 31, 2020 and 2019, respectively, which are included as a component of cost of sales upon sales of the related products. The Company has a separate agreement with Forward China to address the potential impact of customers sourcing directly from Forward China. In the event a customer bypasses the services of the Company and does business directly with Forward China, Forward China will pay a commission of 50% of the net revenue, less direct costs, generated from the products or services sold. No commissions have been received under this agreement. The Company made prepayments to Forward China for inventory purchases of $14,000 and $107,000 at December 31, 2020 and September 30, 2020, respectively, which is included in prepaid expenses and other current assets on the condensed consolidated balance sheets. Promissory Note On January 18, 2018, the Company issued a $1,600,000 promissory note payable to Forward China to fund the acquisition of IPS. The promissory note bears an interest rate of 8% per annum and had an original maturity date of January 18, 2019. Monthly interest payments commenced on February 18, 2018. The Company incurred and paid $32,000 in interest expense associated with this note in both the three months ended December 31, 2020 and 2019. The maturity date of this note was extended to December 31, 2021. Related Party Sales The Company’s design division provided services to a customer whose former Chief Operating and Financial Officer and equity owner is an immediate family member of a director on the Company’s Board of Directors. The director is a member of the Board’s Audit, Governance and Compensation Committees. The Company sold design services to this customer of $38,000 for the three months ended December 31, 2019. There were no sales to this customer for the three months ended December 31, 2020. Related Party Activity During the three months ended December 31, 2020, the Company began selling smart-enabled furniture, which is sourced by Forward China and sold in the U.S. under the Koble brand name. The Koble brand is owned by The Justwise Group Ltd., a company owned by Terrence Wise, Chief Executive Officer and Chairman of the Company. The Company recognized revenues from the sale of Koble products in the U.S. of $186,000 during the three months ended December 31, 2020. |
10. LEGAL PROCEEDINGS
10. LEGAL PROCEEDINGS | 3 Months Ended |
Dec. 31, 2020 | |
Legal Matters and Contingencies [Abstract] | |
LEGAL PROCEEDINGS | NOTE 10 LEGAL PROCEEDINGS On August 21, 2020, IPS was named a third-party defendant in a patent dispute claim currently pending in the U.S. District Court for the Eastern District of New York. The complaint, which contains no specific amount of claimed monetary damages, asserts that certain intellectual property was misappropriated by IPS and one of its former employees. IPS denies the allegations, believes the action is without merit and intends to vigorously defend it. The Company received permission from the District Court to file a motion to dismiss the complaint and filed such motion on December 14, 2020. From time to time, the Company may become a party to other legal actions or proceedings in the ordinary course of its business. At December 31, 2020, 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. |
11. LINE OF CREDIT
11. LINE OF CREDIT | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | NOTE 11 LINE OF CREDIT The Company, specifically IPS, has a $1,300,000 revolving line of credit with a bank which was renewed at the discretion of the lender on August 5, 2020. The line of credit has a maturity date of May 31, 2021, is guaranteed by the Company and is secured by all of IPS’ assets. The interest rate on the line of credit is 0.75% above The Wall Street Journal |
12. DEBT
12. DEBT | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 12 DEBT On April 18, 2020, the Company entered into a loan in an aggregate principal amount of $1,357,000 under the Paycheck Protection Program of the CARES Act. The loan was unsecured, bore interest at a rate of 1% per annum, and was scheduled to mature on April 18, 2022. We accounted for these proceeds as a loan and the current and long-term portions of $827,000 and $530,000, respectively, were included in the corresponding categories of notes payable on the condensed consolidated balance sheet at September 30, 2020. In October 2020, the Company filed for forgiveness of this loan and in December 2020, the Small Business Administration approved our forgiveness request for this loan. The forgiveness has been accounted for as an extinguishment of debt and the resulting gain has been recorded as forgiveness of note payable on the condensed consolidated statement of operations for the three months ended December 31, 2020. In connection with the acquisition of Kablooe, the Company assumed a loan payable with a principal amount of $170,000. The loan matures in August 2021, bears interest at a rate of 6.0% per annum and is secured by all of Kablooe’s assets. Interest and principal payments of $15,000 are payable monthly until maturity. The outstanding balance at December 31, 2020 and September 30, 2020 was $115,000 and $156,000, respectively. |
13. MOONI AGREEMENT
13. MOONI AGREEMENT | 3 Months Ended |
Dec. 31, 2020 | |
Mooni Agreement | |
MOONI AGREEMENT | NOTE 13 MOONI AGREEMENT On January 29, 2019, the Company entered into a three-year Distribution Agreement (the “Agreement”) with Mooni International AB (“Mooni”) and its owner. In accordance with the Agreement, the Company (i) was appointed as the exclusive distributor of Mooni's current and future products (including future products developed or offered by Mooni and/or the owner) in North America, (ii) subject to certain repayment requirements, paid $400,000 to Mooni, and (iii) was granted an option to purchase a controlling interest of Mooni at a valuation not to exceed $5 million which, if exercised, would have been effective on the 12-month anniversary of the effective date of the Agreement. This option was not exercised and therefore expired. Additionally, Forward China, a company owned by Terence Wise, the Company's Chairman and Chief Executive Officer, was named the designated supplier under the Agreement. The Company generated revenues from this agreement of $202,000 and $141,000 in the three months ended December 31, 2020 and 2019, respectively. The current and long-term portions of the unamortized fee of $133,000 and $11,000, respectively, at December 31, 2020 and $133,000 and $45,000, respectively, at September 30, 2020, are included in prepaid expenses and other current assets and other assets, respectively, in the accompanying condensed consolidated financial statements. Amortization of the cost for both the three months ended December 31, 2020 and 2019 of $33,000 is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations. |
14. LEASES
14. LEASES | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 14 LEASES The Company’s operating leases are primarily for corporate, sales and administrative office space. Total operating lease expense was $153,000 and $132,000 for the three months ended December 31, 2020 and 2019, respectively, and is recorded in general and administrative expenses on the condensed consolidated statements of operations. The Company leases certain computer equipment through various finance lease agreements expiring through July 2022. The net book value of assets under finance leases was $21,000 and $23,000 at December 31, 2020 and September 30, 2020, respectively. Interest expense related to assets under finance leases was $1,000 for both the three months ended December 31, 2020 and 2019. Additional information related to operating and finance leases at December 31, 2020 and September 30, 2020 is as follows: December 31, September 30, 2020 2020 Weighted Average Remaining Lease Term (Yrs): Operating Leases 10.7 10.9 Finance Leases 0.7 0.9 Weighted Average Discount Rate: Operating Leases 5.7% 5.7% Finance Leases 5.8% 5.8% At December 31, 2020, future minimum payments under non-cancellable operating and finance leases were as follows: Operating Leases Finance Leases Remainder of Fiscal 2021 $ 347,000 $ 15,000 Fiscal 2022 430,000 10,000 Fiscal 2023 426,000 – Fiscal 2024 433,000 – Fiscal 2025 396,000 – Thereafter 2,804,000 – Total future minimum lease payments 4,836,000 25,000 Less imputed interest (1,277,000 ) (4,000 ) Present value of lease liabilities $ 3,559,000 $ 21,000 |
2. ACCOUNTING POLICIES (Policie
2. ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and all of its subsidiaries: Forward Industries (IN), Inc. (“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries UK Limited (“Forward UK”), Intelligent Product Solutions, Inc. (“IPS”) and Kablooe, Inc. (“Kablooe”). The terms “Forward”, “we” or the “Company” as used throughout this document are used to indicate Forward Industries, Inc. and all of its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The acquisition of Kablooe took place in August 2020 and its results of operations have been included in our condensed consolidated financial statements since the acquisition date. Accordingly, our results of operations for the three months ended December 31, 2020 include Kablooe’s results of operations, while our results of operations for the three months ended December 31, 2019 do not. Key terms of the acquisition are contained in our Form 10-K filed with the Securities and Exchange Commission on December 17, 2020. In the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the year ending September 30, 2021. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2020, and with the disclosures and risk factors presented therein. The September 30, 2020 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. Certain dollar amounts and percentages have been rounded to their approximate value. For the three months ended December 31, 2020, the Company generated net income of $1,199,000, and used $511,000 of cash flow in operating activities. The Company has an accumulated deficit of $11,896,000 at December 31, 2020. We believe our existing cash balance and working capital will be sufficient to meet our liquidity needs at least through February 28, 2022. |
Accounting Estimates | Accounting Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. |
Revenue Recognition | Revenue Recognition Distribution Segment The Company generally recognizes revenue in its distribution segment when: (i) finished goods are shipped to our distribution customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale, i.e., transfer of control); (ii) there are no other deliverables or performance obligations; and (iii) there are no further obligations to the customer after title to the goods has transferred. When the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The distribution segment had no contract liabilities at December 31, 2020. Contract liabilities at September 30, 2020 were $75,000 for the distribution segment. Design Segment The Company applies the “cost to cost” and “right to invoice” methods of revenue recognition to the contracts with customers in the design segment. The design segment typically engages in two types of contracts: (i) time and material and (ii) fixed price contracts. The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method. Revenues from fixed price contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations, or the “cost to cost” method. Revenues from fixed price contracts that contain specific deliverables are recognized when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted. Recognized revenues that will not be billed until a later date, or contract assets, are recorded as an asset and classified as a component of accounts receivable in the accompanying condensed consolidated balance sheets. Contract assets at December 31, 2020 and September 30, 2020 were $805,000 and $649,000, respectively. Contracts where collections to date have exceeded recognized revenues, or contract liabilities, are recorded as a liability and classified as a component of deferred income in the accompanying condensed consolidated balance sheets. Contract liabilities at December 31, 2020 and September 30, 2020 were $170,000 and $410,000, respectively, for the design segment. |
Goodwill | Goodwill Goodwill represents the future economic benefits of assets acquired in a business combination that are not individually identified or separately recognized. The Company’s goodwill resulted from its acquisitions of IPS in January 2018 and Kablooe in August 2020. The Company reviews goodwill for impairment at least annually, or more often if triggering events occur. The Company has two reporting units with goodwill (IPS and Kablooe) and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering event. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform the impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the Company will compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment charge is recognized. If the fair value of the reporting unit is less than its carrying value, an impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value. A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit and the implied fair value of goodwill. Based on management’s evaluation, there were no impairments to goodwill at September 30, 2020 and there were no triggering events leading to an interim impairment analysis at December 31, 2020. |
Intangible Assets | Intangible Assets Intangible assets include trademarks and customer relationships, which resulted from the acquisitions of IPS in Fiscal 2018 and Kablooe in Fiscal 2020 and are recorded based on their estimated fair value determined in conjunction with the purchase price allocations. These intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of our intangible assets, we must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, we may be required to record impairment charges related to our intangible assets. Management evaluated and concluded that there were no impairments of intangible assets at December 31, 2020. |
Income Taxes | Income Taxes The Company recognizes future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards to the extent that realization of these benefits is more likely than not. At December 31, 2020, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets as it is not probable that such deferred tax assets will be realized. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book income tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards. During the three months ended December 31, 2020, the Company’s application for forgiveness of debt was submitted and approved for their loan received as part of the Payroll Protection Program (“PPP loan”) pursuant to the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The aggregate loan principal amount forgiven was $1,357,000. The total amount forgiven will not be recognized as taxable income pursuant to the CARES Act. Pursuant to the Consolidated Appropriations Act, 2021, which was enacted by Congress and signed into law by the President on December 27, 2020, all expenses utilizing funds from PPP loans will be deductible against taxable income. |
Fair Value Measurements | Fair Value Measurements We perform fair value measurements in accordance with the guidance provided by ASC 820, “Fair Value Measurement.” ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset's or liability's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: · Level 1: quoted prices in active markets for identical assets or liabilities; · Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or · Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. |
Leases | Leases L ease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The Company has certain leases that may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease assets are shown as right of use assets and finance lease assets are a component of property and equipment on the condensed consolidated balance sheets. The current and long-term portions of operating and finance lease liabilities are shown separately as such on the condensed consolidated balance sheets. |
Business Combinations | Business Combinations The Company allocates the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships and developed technology, discount rates and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820)” to improve the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In November 2019, the FASB issued ASU 2019-08, “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)” to provide guidance for share-based payment awards granted to a customer in conjunction with selling goods or services accounted for under Topic 606. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that provides clarity to and amends earlier guidance on this topic and would be effective concurrently with the adoption of such earlier guidance. This pronouncement is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 “ addressing customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract, which requires customers to apply internal-use software guidance to determine the implementation costs that are able to be capitalized. Capitalized implementation costs are required to be amortized over the term of the arrangement, beginning when the cloud computing arrangement is ready for its intended use. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance in the first quarter of Fiscal 2021 with no material impact to its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance removes certain exceptions to the general principles in Topic 740 and provides consistent application of U.S. GAAP by clarifying and amending existing guidance. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of the updated guidance on its condensed consolidated financial statements. |
3. INTANGIBLE ASSETS (Tables)
3. INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The Company’s intangible assets consist of the following: December 31, 2020 September 30, 2020 Trademark Customer Relationships Total Intangible Assets Trademark Customer Relationships Total Intangible Assets Gross carrying amount $ 585,000 $ 1,390,000 $ 1,975,000 $ 585,000 $ 1,390,000 $ 1,975,000 Less accumulated amortization (96,000 ) (401,000 ) (497,000 ) (86,000 ) (358,000 ) (444,000 ) Net carrying amount $ 489,000 $ 989,000 $ 1,478,000 $ 499,000 $ 1,032,000 $ 1,531,000 |
Schedule of estimated amortization expense | At December 31, 2020, estimated amortization expense for the Company’s intangible assets for each of the next five years and thereafter is as follows: Remainder of Fiscal 2021 $ 160,000 Fiscal 2022 213,000 Fiscal 2023 213,000 Fiscal 2024 213,000 Fiscal 2025 213,000 Thereafter 466,000 Total $ 1,478,000 |
4. FAIR VALUE MEASUREMENTS (Tab
4. FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurement | The following table presents the placement in the fair value hierarchy and summarizes the changes in fair value of the aforementioned liability for the three months ended December 31, 2020: Fair value measurement at reporting date using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Balance (Level 1) (Level 2) (Level 3) September 30, 2020 $ 90,000 $ – $ – $ 90,000 Decrease in fair value of Kablooe contingent earnout consideration (30,000 ) – – (30,000 ) December 31, 2020 $ 60,000 $ – $ – $ 60,000 |
5. SEGMENT INFORMATION (Tables)
5. SEGMENT INFORMATION (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment financial information | For the Three Months Ended December 31, 2020 2019 Revenues, net Distribution $ 5,606,000 $ 4,696,000 Design 4,112,000 3,697,000 Total revenues, net $ 9,718,000 $ 8,393,000 Cost of sales Distribution $ 4,880,000 $ 4,093,000 Design 2,575,000 2,580,000 Total cost of sales $ 7,455,000 $ 6,673,000 Income/(loss) from operations Distribution $ (344,000 ) $ (443,000 ) Design 177,000 414,000 Total income/(loss) from operations $ (167,000 ) $ (29,000 ) Other (income)/expense, net Distribution $ (1,000 ) $ 34,000 Design (1,365,000 ) 19,000 Total other (income)/expense, net $ (1,366,000 ) $ 53,000 Income/(loss) before income taxes Distribution $ (343,000 ) $ (477,000 ) Design 1,542,000 395,000 Total income/(loss) before income taxes $ 1,199,000 $ (82,000 ) The following table presents total assets by operating segment: December 31, 2020 September 30, 2020 Distribution $ 7,808,000 $ 8,289,000 Design 10,801,000 11,067,000 Total $ 18,609,000 $ 19,356,000 |
7. EARNINGS_(LOSS) PER SHARE (T
7. EARNINGS/(LOSS) PER SHARE (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Earnings/(loss) per share: | |
Schedule of earnings per share | A reconciliation of basic and diluted earnings/(loss) per share is as follows: For the Three Months Ended December 31, 2020 2019 Numerator: Net income/(loss) $ 1,199,000 $ (82,000 ) Denominator: Weighted-average common shares outstanding 9,886,000 9,534,000 Dilutive common share equivalents 154,000 – Weighted-average diluted shares outstanding 10,040,000 9,534,000 Earnings/(loss) per share: Basic $ 0.12 $ (0.01 ) Diluted $ 0.12 $ (0.01 ) |
Schedule of antidilutive securities | The following securities were excluded from the calculation of diluted earnings/(loss) per share in each period because their inclusion would have been anti-dilutive: For the Three Months Ended December 31, 2020 2019 Options 136,000 811,000 Warrants 151,000 151,000 Total potentially dilutive shares 287,000 962,000 |
8. CONCENTRATIONS (Tables)
8. CONCENTRATIONS (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Significant customers with revenue concentrations | The concentrations of revenues and accounts receivable for each reportable segment are as follows: Distribution Segment Revenues Concentration For the Three Months Ended December 31, 2020 2019 Customer A 28% 34% Customer B 16% 13% Customer C 23% 31% Customer D 12% 5% Totals 79% 83% Design Segment Revenues Concentration For the Three Months Ended December 31, 2020 2019 Customer 1 11% 10% Customer 2 12% 10% Customer 3 8% 23% Customer 5 1% 12% Customer 6 15% 0% Customer 7 11% 0% Total 58% 55% At December 31, 2020 and September 30, 2020, concentrations of accounts receivable with significant customers representing 10% or greater of segment accounts receivable were as follows: Distribution Segment Accounts Receivable Concentration December 31, 2020 September 30, 2020 Customer A 27% 23% Customer B 20% 22% Customer C 22% 20% Customer D 20% 17% Totals 89% 82% Design Segment Accounts Receivable Concentration December 31, 2020 September 30, 2020 Customer 1 21% 24% Customer 4 15% 14% Customer 5 3% 10% Customer 7 14% 8% Totals 53% 56% |
14. LEASES (Tables)
14. LEASES (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Supplemental Cashflow information related to leases | Additional information related to operating and finance leases at December 31, 2020 and September 30, 2020 is as follows: December 31, September 30, 2020 2020 Weighted Average Remaining Lease Term (Yrs): Operating Leases 10.7 10.9 Finance Leases 0.7 0.9 Weighted Average Discount Rate: Operating Leases 5.7% 5.7% Finance Leases 5.8% 5.8% |
Schedule of future minimum payments under operating & financial leases | At December 31, 2020, future minimum payments under non-cancellable operating and finance leases were as follows: Operating Leases Finance Leases Remainder of Fiscal 2021 $ 347,000 $ 15,000 Fiscal 2022 430,000 10,000 Fiscal 2023 426,000 – Fiscal 2024 433,000 – Fiscal 2025 396,000 – Thereafter 2,804,000 – Total future minimum lease payments 4,836,000 25,000 Less imputed interest (1,277,000 ) (4,000 ) Present value of lease liabilities $ 3,559,000 $ 21,000 |
2. ACCOUNTING POLICIES (Details
2. ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 9,717,603 | $ 8,392,854 | |
Contract assets | $ 649,000 | 805,000 | |
Net income | 1,199,036 | (81,657) | |
Net cash used in operations | (511,203) | (784,028) | |
Accumulated deficit | (13,095,450) | (11,896,414) | |
Impairment charge of goodwill | 0 | ||
Principal amount forgiven | 1,357,000 | ||
Distribution [Member] | |||
Revenues | 5,606,000 | 4,696,000 | |
Contract liabilities | 75,000 | 0 | |
Design [Member] | |||
Revenues | 4,112,000 | $ 3,697,000 | |
Contract liabilities | $ 410,000 | $ 170,000 |
3. INTANGIBLE ASSETS (Details -
3. INTANGIBLE ASSETS (Details - Intangible Assets) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Gross Carrying Amount | $ 1,975,000 | $ 1,975,000 |
Accumulated Amortization | (497,000) | (444,000) |
Net Carrying Amount | 1,478,000 | 1,531,000 |
Trademarks [Member] | ||
Gross Carrying Amount | 585,000 | 585,000 |
Accumulated Amortization | (96,000) | (86,000) |
Net Carrying Amount | 489,000 | 499,000 |
Customer Relationships [Member] | ||
Gross Carrying Amount | 1,390,000 | 1,390,000 |
Accumulated Amortization | (401,000) | (358,000) |
Net Carrying Amount | $ 989,000 | $ 1,032,000 |
3. INTANGIBLE ASSETS (Details_2
3. INTANGIBLE ASSETS (Details - Estimated amortization expense) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of Fiscal 2021 | $ 160,000 | |
Fiscal 2022 | 213,000 | |
Fiscal 2023 | 213,000 | |
Fiscal 2024 | 213,000 | |
Fiscal 2025 | 213,000 | |
Thereafter | 466,000 | |
Total | $ 1,478,000 | $ 1,531,000 |
3. INTANGIBLE ASSETS (Details N
3. INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization | $ 53,000 | $ 41,000 |
4. FAIR VALUE MEASUREMENTS (Det
4. FAIR VALUE MEASUREMENTS (Details - Fair Value) | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Fair value liabilities, beginning balance | $ 90,000 |
Decrease in fair value of Kablooe contingent earnout consideration | (30,000) |
Fair value liabilities, ending balance | 60,000 |
Fair Value, Inputs, Level 1 [Member] | |
Fair value liabilities, beginning balance | 0 |
Decrease in fair value of Kablooe contingent earnout consideration | 0 |
Fair value liabilities, ending balance | 0 |
Fair Value, Inputs, Level 2 [Member] | |
Fair value liabilities, beginning balance | 0 |
Decrease in fair value of Kablooe contingent earnout consideration | 0 |
Fair value liabilities, ending balance | 0 |
Fair Value, Inputs, Level 3 [Member] | |
Fair value liabilities, beginning balance | 90,000 |
Decrease in fair value of Kablooe contingent earnout consideration | (30,000) |
Fair value liabilities, ending balance | $ 60,000 |
4. FAIR VALUE MEASUREMENTS (D_2
4. FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Fair Value Disclosures [Abstract] | ||
Deferred cash consideration | $ 60,000 | $ 90,000 |
5. SEGMENT INFORMATION (Details
5. SEGMENT INFORMATION (Details - Income Statement) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | $ 9,717,603 | $ 8,392,854 |
Cost of Sales | 7,454,717 | 6,672,845 |
Income/(loss) from operations | (167,493) | (29,129) |
Other (income)/expense, net | (1,366,000) | 53,000 |
Income/(loss) before income taxes | 1,199,036 | (81,657) |
Distribution [Member] | ||
Revenue | 5,606,000 | 4,696,000 |
Cost of Sales | 4,880,000 | 4,093,000 |
Income/(loss) from operations | (344,000) | (443,000) |
Other (income)/expense, net | (1,000) | 34,000 |
Income/(loss) before income taxes | (343,000) | (477,000) |
Design [Member] | ||
Revenue | 4,112,000 | 3,697,000 |
Cost of Sales | 2,575,000 | 2,580,000 |
Income/(loss) from operations | 177,000 | 414,000 |
Other (income)/expense, net | (1,365,000) | 19,000 |
Income/(loss) before income taxes | $ 1,542,000 | $ 395,000 |
5. SEGMENT INFORMATION (Detai_2
5. SEGMENT INFORMATION (Details - Segment assets) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Assets | $ 18,608,500 | $ 19,356,268 |
Distribution [Member] | ||
Assets | 7,808,000 | 8,289,000 |
Design [Member] | ||
Assets | $ 10,801,000 | $ 11,067,000 |
6. SHARE-BASED COMPENSATION (De
6. SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Proceeds from options exercised | $ 1,675 | $ 0 |
Share based compensation expense | $ 41,457 | $ 33,179 |
Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted | 0 | 0 |
Stock issued from exercise of stock options | 2,500 | |
Proceeds from options exercised | $ 2,000 | |
Options exercised, price per share | $ 0.67 | |
Share based compensation expense | $ 41,000 | $ 33,000 |
Unrecognized compensation cost | $ 34,000 | |
Unrecognized compensation cost weighted average vesting period | 7 months 6 days |
7. EARNINGS PER SHARE (Details
7. EARNINGS PER SHARE (Details - Earning per shares) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | ||
Net income/(loss) | $ 1,199,036 | $ (81,657) |
Denominator: | ||
Weighted-average common shares outstanding | 9,885,563 | 9,533,851 |
Dilutive common share equivalents | 154,000 | 0 |
Weighted average diluted shares outstanding | 10,039,799 | 9,533,851 |
Earnings/(loss) per share: | ||
Basic | $ 0.12 | $ (0.01) |
Diluted | $ 0.12 | $ (0.01) |
7. EARNINGS PER SHARE (Detail_2
7. EARNINGS PER SHARE (Details - Antidilutive shares) - shares | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 287,000 | 962,000 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 136,000 | 811,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 151,000 | 151,000 |
8. CONCENTRATIONS (Details - Co
8. CONCENTRATIONS (Details - Concentration sales) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Sales Revenue, Net [Member] | Distribution [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 79.00% | 83.00% | |
Sales Revenue, Net [Member] | Distribution [Member] | Customer A [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 28.00% | 34.00% | |
Sales Revenue, Net [Member] | Distribution [Member] | Customer B [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 16.00% | 13.00% | |
Sales Revenue, Net [Member] | Distribution [Member] | Customer C [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 23.00% | 31.00% | |
Sales Revenue, Net [Member] | Distribution [Member] | Customer D [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 12.00% | 5.00% | |
Sales Revenue, Net [Member] | Design [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 58.00% | 55.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 1 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 11.00% | 10.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 2 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 12.00% | 10.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 3 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 8.00% | 23.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 5 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 1.00% | 12.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 6 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 15.00% | 0.00% | |
Sales Revenue, Net [Member] | Design [Member] | Customer 7 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 11.00% | 0.00% | |
Accounts Receivable [Member] | Distribution [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 89.00% | 82.00% | |
Accounts Receivable [Member] | Distribution [Member] | Customer A [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 27.00% | 23.00% | |
Accounts Receivable [Member] | Distribution [Member] | Customer B [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 20.00% | 22.00% | |
Accounts Receivable [Member] | Distribution [Member] | Customer C [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 22.00% | 20.00% | |
Accounts Receivable [Member] | Distribution [Member] | Customer D [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 20.00% | 17.00% | |
Accounts Receivable [Member] | Design [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 53.00% | 56.00% | |
Accounts Receivable [Member] | Design [Member] | Customer 1 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 21.00% | 24.00% | |
Accounts Receivable [Member] | Design [Member] | Customer 5 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 3.00% | 10.00% | |
Accounts Receivable [Member] | Design [Member] | Customer 7 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 14.00% | 8.00% | |
Accounts Receivable [Member] | Design [Member] | Customer 4 [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk | 15.00% | 14.00% |
9. RELATED PARTY TRANSACTIONS (
9. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Jan. 18, 2018 | Sep. 30, 2020 | |
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | $ 339,292 | $ 419,472 | ||
Forward China [Member] | ||||
Related Party Transaction [Line Items] | ||||
Service fees paid | 343,000 | $ 338,000 | ||
Prepaid expenses and other current assets | $ 14,000 | $ 107,000 | ||
Forward China [Member] | Promissory Note [Member] | ||||
Related Party Transaction [Line Items] | ||||
Debt face amount | $ 1,600,000 | |||
Debt maturity date | Dec. 31, 2021 | Jan. 18, 2019 | ||
Debt interest rate | 8.00% | |||
Interest expense | $ 32,000 | 32,000 | ||
Related To A Director [Member] | Design [Member] | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related party | 0 | $ 38,000 | ||
Chief Executive Officer [Member] | Koble [Member] | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related party | $ 186,000 |
11. LINE OF CREDIT (Details Nar
11. LINE OF CREDIT (Details Narrative) - IPS [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Line of credit maximum amount | $ 1,300,000 | |
Line of credit expiration date | May 31, 2021 | |
Line of credit interest rate | 0.75% above The Wall Street Journal prime rate | |
Line of credit effective interest rate | 4.00% | 4.00% |
Line of credit amount remaining | $ 300,000 |
12. DEBT (Details Narrative)
12. DEBT (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Sep. 30, 2020 | |
Note payable, current | $ 114,894 | $ 983,395 |
Note payable, noncurrent | $ 0 | 529,973 |
Paycheck Protection Program | ||
Debt issuance date | Apr. 18, 2020 | |
Debt maturity date | Apr. 18, 2022 | |
Loan received | $ 1,357,000 | |
Loan Payable [Member] | Kablooe [Member] | ||
Debt face amount | $ 170,000 | |
Debt maturity date | Aug. 31, 2021 | |
Debt interest rate | 6.00% | |
Payment frequency | monthly | |
Periodic payment amount | $ 15,000 | |
Loan payable outstanding | $ 115,000 | $ 156,000 |
Paycheck Protection Program | ||
Debt interest rate | 1.00% | |
Note payable, current | $ 827,000 | |
Note payable, noncurrent | $ 530,000 |
13. MOONI AGREEMENT (Details Na
13. MOONI AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jan. 29, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Revenues | $ 9,717,603 | $ 8,392,854 | ||
Unamortized fee - current portion | 339,292 | $ 419,472 | ||
Unamortized fee - noncurrent portion | 72,251 | 116,697 | ||
Amortization of option | 33,000 | 33,000 | ||
Distribution Agreement [Member] | Mooni International [Member] | ||||
Unamortized fee - current portion | 133,000 | 133,000 | ||
Unamortized fee - noncurrent portion | 11,000 | $ 45,000 | ||
Mooni International [Member] | ||||
Revenues | $ 202,000 | $ 141,000 | ||
Payment for distribution agreement | $ 400,000 |
14. LEASES (Details - Supplemen
14. LEASES (Details - Supplemental cash flow info) | Dec. 31, 2020 | Sep. 30, 2020 |
Weighted Average Remaining Lease Term | ||
Operating leases | 10 years 8 months 12 days | 10 years 10 months 25 days |
Finance leases | 8 months 12 days | 10 months 25 days |
Weighted Average Discount Rate | ||
Operating leases | 5.70% | 5.70% |
Finance leases | 5.80% | 5.80% |
14. LEASES (Details - Future mi
14. LEASES (Details - Future minimum payments Operating lease) | Dec. 31, 2020USD ($) |
Operating lease future minimum payments | |
Remainder of 2021 | $ 347,000 |
2022 | 430,000 |
2023 | 426,000 |
2024 | 433,000 |
2025 | 396,000 |
Thereafter | 2,804,000 |
Total future minimum lease payments | 4,836,000 |
Less: amount representing imputed interest | (1,277,000) |
Total | $ 3,559,000 |
14. LEASES (Details - Future _2
14. LEASES (Details - Future minimum payments Finance leases) | Dec. 31, 2020USD ($) |
Future minimum payments finance lease | |
Remainder of 2021 | $ 15,000 |
2022 | 10,000 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
Total future minimum lease payments | 25,000 |
Less: amount representing imputed interest | (4,000) |
Total | $ 21,000 |
14. LEASES (Details Narrative)
14. LEASES (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Leases [Abstract] | |||
Rent expense | $ 153,000 | $ 132,000 | |
Net book value of assets under finance leases | 21,000 | $ 23,000 | |
Finance Lease, Interest Expense | $ 1,000 | $ 1,000 |