Company: FWDI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001683168-25-006141
Chunk: 26

Company: Forward Industries, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 26
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 (the “PS Agreement”) and related Registration Rights
Agreement with two accredited investors whereby the Company granted the investors an aggregate of 1,000,000 shares of the Series B and
warrants to purchase an additional 111,111 shares of common stock in exchange for $1,000,000. The PS Agreement contains restrictions
on the Company’s ability to incur debt, issue additional preferred shares, enter into a change of control transaction or make restricted
payments without prior written consent of the investors. The Company paid third-party fees of $66,500 associated with this agreement,
of which $29,000 related to the preferred stock portion of the agreement and has been deducted from the proceeds and recorded as a reduction of additional paid-in capital, and $37,500 related to the warrants and has been recorded as a component of general and administrative expenses on the condensed consolidated financial
statements at June 30, 2025.

Warrants

In
connection with the PS Agreement, the Company issued warrants to purchase 111,111 shares of its common stock with an exercise price of
$6.50 per share and an expiration date of May 23, 2030. The warrants have been classified as a liability because the nature of certain settlement provisions prevent them from meeting the fixed-for-fixed equity
classification criteria in ASC 815, “Derivatives and Hedging.” The fair value of the warrants was measured on the grant date
and is remeasured every reporting period with the resulting gain or loss from the change in fair value recorded as a component of other
income/expense on the condensed consolidated financial statements. The fair value of the warrants was estimated using a Black-Scholes valuation
methodology using the assumptions in the following table, which are categorized within Level 3 of the fair value hierarchy. The expected
term represents the remaining contractual term of the warrants. The expected volatility is based on the historical price of the Company’s
common stock over the most recent periods commensurate with the expected term of the warrants. The risk-free interest rate is based on
the implied yield of U.S. Treasury zero-coupon issues with a remaining term equivalent to the warrants’ expected term. The Company
historically has not paid any dividends on its common stock and has no intention to do so in the foreseeable future.

    Schedule of warrant assumptions 
    May 23, 
    June 30,

    2025 
    2025
  
    Expected term (years) 
     5.0