Company: FWDI
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001683168-25-003548
Chunk: 25

Company: Forward Industries, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 1
Chunk 25
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 agreed to reduce the fixed portion of the sourcing fee from $100,000 to $83,333 per month for the remaining term of the
Supply Agreement, which expired in October 2023. Effective October 2023, the Company and Forward China entered into a new sourcing agreement
under which the fixed portion of the sourcing fee was further reduced to $65,833 per month. Other terms in the agreement are substantially
the same as the prior agreement. Due to the Retail Exit and decline in the OEM distribution segment business, the new sourcing agreement
expired October 31, 2024. In November 2024, the Company and Forward China agreed to: (i) extend the sourcing agreement until April 30,
2025, but allow either party to cancel with 30 days’ notice, (ii) reduce the fixed portion of the sourcing fee to $35,000 per month,
and (iii) change the payment terms to better align with payments from the Company’s customers. See Notes 3 and 11.

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 $133,000 and $219,000 during the three months ended March 31, 2025 and 2024, respectively, and $292,000 and $453,000 for the
six months ended March 31, 2025 and 2024, respectively, which are included as a component of cost of sales upon sales of the related products.
Due to the OEM Plan, these costs are now included in income from discontinued operations for the three and six months ended March 31,
2025 and 2024. The Company had purchases from Forward China of approximately $1,888,000 and $2,007,000, for the three months ended March
31, 2025 and 2024, respectively, and $3,559,000 and $3,523,000 for the six months ended March 31, 2025 and 2024, respectively. 

In order to preserve the
Company’s current and future liquidity, in November 2023, the Company and Forward China entered into an agreement whereby Forward
China agreed to limit the amount of outstanding payables it would seek to collect from the Company to $500,000 in