Company: FWDI
Filing Date: 2025-09-16
Form Type: 8-K
Source: 0001683168-25-007036
Chunk: 62

Company: Forward Industries, Inc.
Filing Date: 2025-09-16
Form: 8-K
Item: Item 8
Chunk 62
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500 
  
    Warrants 
     7,500  
     7,500 
  
    Total potentially dilutive shares 
     136,500  
     133,000 

NOTE 8        RELATED PARTY TRANSACTIONS

Buying Agency and Supply Agreement

The Company has a Buying
Agency and Supply Agreement (the “Supply Agreement”) with Forward China. The Supply Agreement provides that, upon the terms
and subject to the conditions set forth therein, Forward China will 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 purchases products at Forward China’s
cost and, through March 2023, paid Forward China a monthly service fee equal to the sum of (i) $100,000, and (ii) 4% of “Adjusted
Gross Profit”, which is defined as the selling price less the cost from Forward China. Effective April 1, 2023, the Company and
Forward China 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.

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 $159,000 and $234,000 during the three months ended December 31, 2024 and 2023, respectively, which are included as a component
of cost