Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 824

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 6
Chunk 824
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 Company adopted this guidance in Fiscal 2025, which did not have a material impact
on its financial statements.

NOTE 3         DISCONTINUED
OPERATIONS AND ASSETS HELD FOR SALE

In July 2023, the Company decided
to cease operations of its retail distribution segment (“Retail Exit”). The primary assets of the retail segment were inventory
and accounts receivable. The Company sold, liquidated, or otherwise disposed of all remaining retail inventory, and collected remaining
retail accounts receivable by September 30, 2024, at which time the retail segment was considered fully discontinued. We expect to have
no further significant continuing involvement with this segment. The Retail Exit was considered a strategic shift that would have a significant
impact on the Company’s operations and financial results. The inventory of the retail segment met the criteria to be considered
“held-for-sale” in accordance with ASC 205-20, “Discontinued Operations.” Accordingly, the retail inventory was
classified on our consolidated balance sheets as “discontinued assets held for sale” at September 30, 2023, and the results
of operations for the retail segment have been classified as “Discontinued Operations” on the consolidated statements of operations
for the years ended September 30, 2025 and 2024.

In March 2025, in
connection with the fourth Conversion Agreement (see Note 14), Forward China determined it would not renew the Buying Agency and
Supply Agreement (“Sourcing Agreement”), which subsequently expired on May 9, 2025 (see Note 14). Without this
agreement, the Company determined it would not continue the OEM segment of the business and committed to a plan to sell the segment.
On May 16, 2025, the Company and Forward US entered into a transaction agreement with Forward China, pursuant to which: (i) the
Company sold all equity interest in Forward Switzerland and Forward UK and sold certain other net assets related to Forward
US’ OEM segment to Forward China to satisfy outstanding payables due to Forward China under the Sourcing Agreement; (ii) the
Company and Forward China terminated the Sourcing Agreement and extended the term of the Note Payable (see Note 14) to December 31,
2025; and (iii) the Company paid Forward China $200,000 at closing plus $150,000
on each of July 31, 2025, August 31, 2025 and September 30, 2025.