Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 682

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 4
Chunk 682
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Supply Agreement”) with Forward China. The Supply Agreement provided that, upon the terms and subject
to the conditions set forth therein, Forward China would act as the Company’s exclusive buying agent and supplier of Products (as
defined in the Supply Agreement) in the Asia-Pacific region. The Company purchased products at Forward China’s cost and, from October
2023 through October 2024, paid Forward China a monthly service fee equal to the sum of (i) $65,833, and (ii) 4% of “Adjusted Gross
Profit”, which is defined as the selling price less the cost from Forward China. Due to the Retail Exit and decline in the OEM distribution
segment business, this 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.
The Sourcing Agreement was extended until May 9, 2025, and was subsequently terminated in connection with the sale of the OEM segment.
See Note 3.

In connection with the sale of
the OEM segment, effective May 16, 2025, the Company and Terence Wise, who served as the Chief Executive Officer of the Company, the Chairman
of the Board of Directors, and a director, entered into a Separation Agreement pursuant to which, Mr. Wise resigned from all of these
positions with the Company.

Terence Wise, former Chief Executive
Officer and Chairman of the Company, is the owner of Forward China and beneficially owned more than 5% of the Company’s common stock
prior to the Private Placement (see Note 8). In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owned more than
5% of the Company’s common stock prior to the Private Placement. The Company recorded service fees to Forward China of $331,000
and $891,000 during Fiscal 2025 and Fiscal 2024, respectively, which were 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 Fiscal 2025 and Fiscal 2024. The
Company had purchases from