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Correspondence

  Douglas Sabra

	1801 Green Road, Suite E

	Pompano Beach, Fl 33064

  Tel: (964) 360-6420
	Fax: (954) 419-9735

  Email: dsabra@forwardindustries.com

February 27, 2006

VIA FACSIMILE AND MAIL

Securities and Exchange
Commission

Division of Corporation
Finance

100 F Street, N.E., Stop 7010

Washington, D.C. 20549

Attention: Ernest Greene

RE: SEC Comment Letter
dated February 21, 2006

Dear Mr. Greene:

We have reviewed the comments
included in the Staff's letter dated February 21, 2006 regarding our Form
10-QSB for the fiscal quarter ended December 31, 2005 (File No. 0-6669) filed
by Forward Industries, Inc. ("Forward") with the Commission on February 2,
2006. Your original comments, which we have numbered for convenience of
reference, and our responses thereto, keyed to the numbered comments, are
provided below.

Staff Comment on Form
10-QSB for the fiscal quarter ended December 31, 2005

You
indicate that revenue was adversely affected by the adoption of a sourcing,
billing and payment arrangement for one of your OEM customers in which revenue
is recognized only to the extent of the related gross profit on sales to the
customer. However, in the prior year, the full sales price of the product to
this customer was recognized as revenue. We have the following comments
regarding the adoption of this new arrangement.

	[i]With reference to the
indicators in EITF 99-19 and the specific terms of the sourcing, billing and
payment arrangement, please address the specific facts and circumstances that
resulted in the change from gross revenue reporting to net revenue reporting.

	[ii]Clarify why you adopted
this new arrangement for one of your OEM customers.

	[iii]With reference to the
typical terms of your other revenue arrangements, please support the gross
revenue reporting for these arrangements as presented in your Form 10-K
for the year ended September 30, 2005.

Forward's Response

i. This sourcing, billing,
and payment arrangement pertains to a single customer's product and is unique
to us in that this is our only customer located in China who requires VAT
invoices in Renminbi for products distributed domestically in China.  Because Forward lacks the appropriate registrations and licenses in China to produce Renminbi-based VAT invoices, we must use an intermediary to invoice this
customer.  During the fiscal year ended September 30, 2005 ("Fiscal 2005") and
the three months ended December 31, 2005 (the "2006 Quarter"), the cell phone
carrying case products in question were the only products we sold to this
customer for distribution in China.

Under our original sourcing,
billing, and payment arrangement, which was in place during the first three
quarters of Fiscal 2005 and earlier, we used one of our Chinese suppliers,
which is licensed to invoice in Renminbi domestically in China, as an
intermediary to invoice and collect payment from this customer and remit
payment to us in U.S. dollars.  This supplier did not manufacture or own the
products and merely served as our billing and collection agent with respect to
this customer.  Forward purchased the products from a different, unrelated
supplier, retained title to the products and used the
supplier/intermediary only to ship, invoice, and collect payment from our customer
for the products and remit payment to us in U.S. Dollars, less an
administration fee of eight percent.

ii.  During the third quarter
of Fiscal 2005 we entered into negotiations with this supplier to establish a
new sourcing, billing, and payment arrangement. Under the revised arrangement,
which was effective for the entire fourth quarter of Fiscal 2005[1]
our Chinese supplier/intermediary manufactures or purchases the products from
unrelated third party suppliers, and thereby acquires ownership of the
products, bears the risks and rewards of ownership of the products until
received and accepted by the China customer, invoices the China customer,
collects payment from the China customer in Renminbi, and remits payment to
Forward in U.S. Dollars approximating 30% of the gross sales price
(representing our gross profit), which we recognized as revenue on a net basis.

iii Under the arrangement in
place during the 2006 Quarter, because Forward does not own the product, does
not take title to the product, and does not bear the risks and rewards of
ownership, we recognized revenue on a net basis only to the extent of the
related gross profit on sales to this customer in accordance with EITF 99-19.
This situation would be similar to Forward receiving a sales commission on
these transactions.  Under the arrangement in place during Fiscal 2005, Forward
purchased the products from a different supplier, retained title to the product
and bore the risks and rewards of ownership of the product until it had been
received and accepted by our customer at its premises.  Accordingly, Forward
recognized the full sales price of this product as gross revenue in accordance
with EITF 99-19.  This reflects the revenue recognition policy that Forward
applies with respect to sales of other products to all of its customers,
including the customer in question for product sales outside of China.

As requested in your letter,
Forward acknowledges that:

 Forward is responsible for
     the adequacy and accuracy of the disclosure in its filings;

 staff comments or changes
     to disclosure in response to staff comments do not foreclose the
     Commission from taking any action with respect to the filing; and

 Forward
     may not assert Staff comments as a defense in any proceeding initiated by
     the Commission or any person under the federal securities laws of the United States.

If
you should have any further comments or would like to discuss any of the
responses above, please contact me at your convenience.

Sincerely
yours,

Douglas W. Sabra

Chief Financial Officer

Forward Industries, Inc.

(954) 360-6420

cc: Rufus Decker, Branch
Chief

Jeanne Baker, Assistant Chief
Accountant

Patrick Gannon, Kaufman,
Rossin & Co., P.A.

Jerome E. Ball, Chief
Executive Officer, Forward

[1]
Forward did not discuss this change in our billing and collection arrangement
in our Form 10-KSB filing in respect of Fiscal 2005, in light of the following
considerations: (i) when we agreed to change the arrangement in May 2005, we
still had on hand a substantial amount of product that we had purchased and
owned under the original arrangement-it took until late June 2005 to sell that
product, which was recognized at the full sales price of the product, less the
administrative charge; (ii) under Form 10-KSB, small business issuers are not
required to separately present results of operations for the fourth fiscal
quarter, the first full quarter for which we recognized revenue from this
customer on a net basis; and (iii) the amount of revenue that was recognized on
a net basis in the fourth quarter of Fiscal 2005 was not material to our
reported results of operations.  Given the reduced level of our sales in the
2006 Quarter, the impact of the revised arrangement on our reported revenues
became material, and we elected to disclose the new arrangement.