Company: FWDI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001683168-25-006141
Chunk: 18

Company: Forward Industries, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 18
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 2024. The Company is currently evaluating the effects of this pronouncement on its condensed
consolidated 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 condensed 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 condensed
consolidated statements of operations for the three and nine months ended June 30, 2025 and 2024.

In March 2025, in connection
with the fourth Conversion Agreement (see Note 8), Forward China determined it would not renew the Buying Agency and Supply Agreement
(“Sourcing Agreement”), which subsequently expired on May 9, 2025 (see Note 8). 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 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. Additionally, the Company and Forward China terminated the Supply Agreement and extended
the term of the Note Payable (see Note 8) to December 31, 2025. The Company paid $200,000 at closing and agreed to make additional cash
payments of $150,000 on each of July 31, 2025, August 31, 2025 and September