Company: FWDI
Filing Date: 2025-01-17
Form Type: 10-K/A
Source: 0001683168-25-000424
Chunk: 19

Company: Forward Industries, Inc.
Filing Date: 2025-01-17
Form: 10-K/A
Chunk 19
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 either party to cancel with 30
days’ notice, (ii) reduce the fixed portion of the sourcing fee to $35,000 per months, and (iii) change the payment terms to better
align with payments from our customers.

On November 2, 2023,
Forward and Forward China entered into a Deferred Payment Agreement. As of October 30, 2023, Forward owed Forward China $7,365,238
for the purchase of products in its OEM and Retail Divisions and the cancelation of open purchase orders related to Forward’s
exit from the Retail Division. To preserve Forward’s liquidity position in the future, Forward China agreed to limit the
amount of the Payables that it would seek to collect from Forward to $500,000 in any 12-month period. As of January 15, 2025,
the remaining balance covered by this agreement was approximately $4,881,000.

In order to maintain compliance
with Nasdaq’s listing standards, the Company entered into two separate agreements with Forward China (the “Conversion Agreements”)
which were effective in July and September of 2024, to convert portions of accounts payable due to Forward China into shares of preferred
stock. Under the terms of the Conversion Agreements, Forward China agreed to convert $2,200,000 of payables into 2,200 shares of the
Company’s newly designated Series A-1 with a stated value of $1,000 per share. The holders of the Series A-1 have no voting rights
and rank senior to all classes or series of the Company’s common stock with respect to the distribution of assets upon liquidation,
dissolution, or winding up. Subject to a 19.9% share cap (as defined in the Certificate of Amendment of the Certificate of Incorporation
filed related to the transaction), the Series A-1 shall be convertible into a number of shares of the Company’s common stock as
determined by (i) multiplying the number of shares to be converted by the Stated Value, (ii) adding the result of all accrued and accumulated
and unpaid dividends on such shares to be converted, and then (iii) dividing the result by the conversion price of $7.50, subject to
adjustment as defined in the COD. The Series A-1 is not redeemable.

In October 2020, the Company
began selling smart-enabled furniture, which is sourced by Forward China and sold in the U.S. under the