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Forward Industries

		James McKenna

		Chief
Financial Officer

		1801 Green
Road, Suite E

		Pompano
Beach, Fl 33064

		Tel: (954)
360-6408

		Fax: (954)
360-6409

		Email:jmckenna@forwardindustries.com

March 18, 2010

Mail Stop 4631

Mr. Jeffrey Gordon

Securities and Exchange
Commission

Division of Corporation
Finance

100 F Street, N.E.,

Washington, D.C. 20549

RE:     Forward
Industries, Inc.

            Form 10-K for
the fiscal year ended September 30, 2009

            Form 10-Q for
the fiscal quarter ended December 31, 2009

            File No.
0-6669

Dear Mr. Gordon:

We have reviewed your letter
dated March 8, 2010 commenting on registrant’s above-referenced Form 10-K and
Form 10-Q, and our responses are set forth below. For your convenience, preceding
each response we have set forth the related comment made in your letter in
italics.  Where registrant proposes revised disclosure in its future
filings in response to the comment, the proposed textual changes are presented
in bold faced font.

Credit Risk, page 7

Since your accounts
receivable credit risk lies with your OEM customers’ contract manufacturers,
please expand your discussion of credit risk to address the payment history of
both your OEM customers and their contract manufacturers.

In our past disclosures
relating to credit risk, we have thought it appropriate to clarify that
ultimate risk of non-payment did not necessarily lie with our OEM “customer”
when that customer’s arrangements with its contract manufacturer resulted in
registrant’s shipments to, and accounts receivable from, the contract
manufacturer.  However, by drawing this distinction, we did not thereby wish to
create the implication that the actual payment history of contract
manufacturers that registrant has experienced over the years has in any way
been unacceptable or created payment or collection issues different from that
of our OEM customers.  Both OEM customers and contract manufacturers have historically
performed quite satisfactorily and substantially in accordance with the terms
of purchase orders.

In our future filings on
Form 10-K, we propose the following revised disclosure under Item 1 with regard
to Credit Risk (text describing contract manufacturers has been moved into the
first paragraph so that the second paragraph refers equally to OEM customers
and contract manufacturers):

Credit Risk

We generally sell our products on 60- to 90-day credit terms customary
in the industry.  Our significant OEM customers are large, multi-national
companies with good credit histories. When we ship product to our OEM
customer’s designated contract manufacturer and invoice such manufacturer (and
not the OEM customer), even though our order flows originate with and depend on
our relationship with the OEM, our accounts receivable credit risk lies with
the contract manufacturer.  Our OEM customer does not guarantee the credit of
the contract manufacturer to whom the OEM requests us to ship our carrying case
products, and such order volumes may be significant from time to time.  In most
cases, these contract manufacturers are themselves large multinational
enterprises with good credit.

Historically, we have not had significant credit
or collection
problems with our OEM customers or their contract manufacturers. None
of these customers or their contract manufacturers is or has been in
default to us, and payments are generally received from them on a timely basis.
Two customers, including their affiliates or contract manufacturers, accounted
for approximately XX% and XX% of the Company's accounts receivable at September
30, 20XX and 20XX, respectively.

Liquidity and Capital Resources, page 20

We
note that you maintain a credit facility and have agreed to certain financial
covenants in connection with the facility. As such, please disclose here and in
your financial statement footnotes the specific terms of any material debt
covenants in your debt agreements. In addition, please revise to indicate your
debt covenant compliance status as of the most recent period-end. See Sections
I.D and IV.C of the SEC Interpretive Release No. 33-8350.

Registrant’s wholly-owned
Swiss subsidiary Forward Innovations GmbH (FI) has been in compliance in all
material respects with covenants under its credit facility during the term
thereof.  Under the terms of the facility the bank had the right to terminate
the facility: (i) if payment of interest and principal was not made within 30
days of the date due; (ii) upon bankruptcy of FI; (iii) bank assessment that
FI’s asset and/or revenue outlook had deteriorated significantly; (iv) upon a
change of control of FI; (v) upon a merger and/or acquisition or transfer of
significant assets to a third party on the part of FI; or (vi) FI’s audit
report contains a material qualification.  The credit facility did not obligate
FI to comply with any financial ratios or tests or other financial covenants.

It should be noted that the
credit facility expired in accordance with its terms on December 31, 2009, and we
believe that it is likely that the facility will be replaced with a simple
letter of credit as the means to satisfy the requirements of the freight
forwarder acting on registrant’s behalf in the Netherlands. In our future
filings on Form 10-K and Form 10-Q, we propose the following expanded
disclosure under Item 7 relating to registrant’s MD&A disclosures (changes
to the disclosures set forth in the 10-K for the fiscal year ended September 30,
2009, are identified in bold) and such disclosures will be included in
registrant’s Form 10-Q filings, in each case to the extent applicable.  To the
extent applicable, registrant will revise its disclosures in the footnotes to
its financial statements to be consistent with those proposed for inclusion in
its MD&A.

In addition, assuming the
credit facility is not renewed, as noted above, such revised disclosure will be
relevant only to balance sheet dates in respect of past reporting periods and
not prospectively.  Insofar as we do not believe that registrant falls within
either of the two scenarios referred to in Section IV.C of Interpretative
Release No. 33-8350, we respectfully submit that it is not necessary to provide
greater detail than that included in the proposed, revised disclosure set forth
below:

Liquidity and Capital
Resources

[This disclosure will be
recast as historical rather than current.]Forward Innovations maintains a
credit facility with a Swiss bank that provides for an uncommitted line of
credit in the maximum amount of $400,000.  Amounts borrowed under the
facility may be structured as a term loan or loans, with a maximum repayment
period of 12 months, or as a guarantee facility, or any combination of the
foregoing.  Either party may terminate the facility at any time; however,
such termination would not affect the stated maturity of any term loan
outstanding under the facility.  Amounts
borrowed other than as a term loan must be settled periodically or converted
into term loans. In connection with this facility, Forward Innovations agreed
to certain customary financial covenants, with which we believe it has
been in compliance in all material respects.  Such covenants do not
include any financial ratios or other financial tests.  Amounts drawn under
this credit facility bear interest at variable rates [...]

Consolidated Statements of Cash Flows, page 31

Please present the effect
of exchange rate changes on cash balances held in foreign currencies as a
separate part of the reconciliation of the change in cash and cash equivalents
during the period. See FASB ASC 830-230-45-1.

In our future filings on
Form 10-K and Form 10-Q, we propose to present the effect of exchange rate
changes on cash balances held in foreign currencies within our Consolidated
Statements of Cash Flows as follows:

			For the Fiscal Years

			Ended September 30,

			20XX

			20XX

			Operating activities:

			Net
  income...................................................................................

			$XXX

			$XXX

			Adjustments to reconcile net income to net cash provided
  by

			operating activities:

			Gain
  (loss) on foreign currency cash balances

			X

			X

			Changes
  in operating assets and liabilities:

			Net
  cash provided by operating activities...................................................................

			XX

			XX

			Net
  cash provided by investing activities...................................................................

			XX

			XX

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

			XX

			XX

			Effect of exchange rate
  changes on cash....................................

			X

			X

			Net increase in cash and
  cash equivalents..................................................................

			XX

			XX

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

			XX

			XX

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

			$XX

			$XX

Note 2 – Accounting Policies, page 32

Please
disclose the types of the expenses that you include in the cost of goods sold
line item as well as the types of expenses that you include in the selling and
general and administrative expenses line items. Please also disclose whether
you include inbound freight charges, purchasing and receiving costs, inspection
costs, warehousing costs, internal transfer costs, and the other costs of your
distribution network in the cost of goods sold line item. With the exception of
warehousing costs, if you currently exclude a portion of these costs from cost
of goods sold, please disclose:

	in a footnote the line items
that these excluded costs are included in and the amounts included in each line
item for each period presented, and

	in MD&A that your gross
profit may not be comparable to those of other entities, since some entities
include all of the costs related to their distribution network in cost of goods
sold and others like you exclude a portion of them from gross profit.

While we have in our filings
on Form 10-K and 10-Q routinely included disclosures in the “gross profit”
discussion in the MD&A of certain components of cost of goods sold that
impacted gross profit amounts, such as the costs of operating our Hong Kong
distribution and QA facility, registrant agrees that more precise delineation
of the types of expenses it includes in COGS as distinct from SG&A line
items will enhance clarity in our disclosures.  All expenses incurred in
operating our Hong Kong distribution and QA facility are included in COGS,
including salary and related expense of persons employed by the facility.
Insofar as the comment relates to SG&A expense, registrant’s accounting
policies, practices, and financial statement presentation are in accordance
with US GAAP.

As to the last question (and
related bullet points) in the comment, registrant does not exclude any portion
of the enumerated costs from COGS.

In our future filings on Form
10-K and Form 10-Q, we propose the following expanded accounting policy in our
footnotes to our consolidated financial statements with regard to our shipping
and handling costs.

Shipping and Handling Costs

The
Company expenses shipping and handling costs (including inbound freight
charges, purchasing and receiving costs, inspection costs, warehousing costs,
internal transfer costs, and other costs associated with the Company’s
distribution network) as a component of cost of goods sold in the
accompanying consolidated statements of operations.

Please disclose the line
item(s) in which you include depreciation and amortization. If you do not
allocate a portion of your depreciation and amortization to cost of goods sold,
please also revise your presentation to comply with SAB Topic 11:B, which would
include revising the cost of goods sold title and removing the gross profit
subtotal throughout the filing.

In its accounting policies
and practices, registrant includes depreciation and amortization expense
attributable to property, plant and equipment used in connection with its
production activities in its cost of goods sold line item.  Registrant includes
depreciation and amortization expense attributable to property, plant and
equipment used in connection with selling and administrative functions in the
SG&A line item.

In our future filings on Form
10-K and Form 10-Q, we propose the following expanded accounting policy in our
footnotes to our consolidated financial statements with regard to our property,
plant and equipment:

Property, Plant
and Equipment

Property,
plant and equipment consist of furniture, fixtures and equipment, and leasehold
improvements and are recorded at cost. Expenditures for major additions and
improvements are capitalized, and minor replacements, maintenance, and repairs
are charged to expense as incurred. When property, plant and equipment are
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is included in the
results of operations for the respective period. Depreciation is provided over
the estimated useful lives of the related assets using the straight-line method
for financial statement purposes. The estimated useful life for furniture,
fixtures and equipment ranges from three to ten years. Amortization of leasehold
improvements is computed using the straight-line method over the shorter of the
remaining lease term or the estimated useful lives of the improvements. For the
fiscal years ended September 30, 20XX and 20XX, the Company recorded
approximately $XXXX and $XXXX of depreciation and amortization expense,
respectively. Depreciation and amortization for production related property,
plant and equipment is included as a component of costs of goods sold in the
accompanying consolidated statements of operations. Depreciation and
amortization for selling and general and administrative related property, plant
and equipment, is included as a component of operating expenses in the
accompanying consolidated statements of operations.

Note 8 – Income Taxes, page 39

It is not clear how you
met the disclosure requirements set forth in FASB ASC 740-10-50-15 and
740-10-50-19. Please advise or revise your disclosures in future filings
accordingly.

Registrant’s policy is to
account for interest and penalties related to income taxes in its statement of
operations.  The registrant has not incurred any such interest or penalties in at
least five years and likely much longer.

In our future filings on Form
10-K and Form 10-Q, in order to address the comment relating to FASB ASC 740-10-50-15,
we propose the following expanded disclosure relating to registrant’s
accounting policies in our footnotes to our consolidated financial statements :

Income Taxes

The
Company accounts for its income taxes in accordance with the generally accepted
accounting principles in the U.S. which requires, among other things,
recognition of future tax benefits and liabilities measured at enacted rates
attributable to temporary differences between financial statement and income
tax bases of assets and liabilities and to tax net operating loss carryforwards
to the extent that realization of these benefits is more likely than not. The
Company periodically evaluates the realizability of its net deferred tax
assets. The Company’s policy is to account for income tax related interest and penalties,
if any, in income tax expense in the statement of operations. For the periods
presented in the accompanying statements of operations no income tax related
interest or penalties were assessed or recorded.

In our future filings on Form 10-K and Form 10-Q, in order to
address the comment relating to FASB ASC 740-10-50-19, we also propose the
following revision to the footnote to our consol