<PAGE>

--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 for the quarterly period ended March 31, 1999.
                                            ---------------

                                       Or

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 for the transition period from ____ to ____


                          Commission file number 0-6669

                            FORWARD INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


               New York                                 13-1950672
----------------------------------------    ------------------------------------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)


      400 Post Avenue, Westbury, NY                       11590
----------------------------------------    ------------------------------------
(Address of principal executive offices)                (Zip Code)


                                 (516) 338-0700
                ------------------------------------------------
                (Issuer's Telephone Number, including Area Code)



        ---------------------------------------------------------------
        (Former name, former address and former fiscal year, if changed
                               since last report)


Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ].

As of April 29, 1999, 5,928,141 Shares of the issuer's Common Stock were
outstanding.

Transitional Small Business Disclosure Format:    Yes [ ]   No [X]

--------------------------------------------------------------------------------
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

                                   FORM 10-QSB

                         SIX MONTHS ENDED MARCH 31, 1999

                                    CONTENTS


                                                                            PAGE

PART I.FINANCIAL INFORMATION                                                  3

Item 1.Financial Statements                                                   3

Consolidated Balance Sheets
   as of March 31, 1999 (Unaudited)
   and September 30, 1998                                                     3

Consolidated Statements of Income
   (Unaudited) for the Six Months
   ended March 31, 1999 and 1998                                              5

Consolidated Statements of Comprehensive Income
   for the Six Months ended March 31, 1999 and 1998                           6

Consolidated Statements of Cash Flows
   (Unaudited) for the Six Months
   ended March 31, 1999 and 1998                                              7

Notes to Form 10-QSB (Unaudited)                                              9

Item 2.Management's Discussion and Analysis                                  17

PART II.OTHER INFORMATION                                                    21

Item 1.Legal Proceedings                                                     21

Item 2.Changes in Securities                                                 21

Item 3.Defaults upon Senior Securities                                       21

Item 4.Submission of Matters to a Vote of Security Holders                   22

Item 5.Other Information                                                     22

Item 6.Exhibits and Reports on Form 8-K                                      22



                                       2
<PAGE>

PART I.   ITEM 1.  FINANCIAL STATEMENTS

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   March 31,     September 30,
                                                                     1999            1998   
                                                                  ----------      ----------
ASSETS                                                            (Unaudited)
<S>                                                               <C>             <C>
CURRENT ASSETS:
     Cash and cash equivalents                                    $  407,199      $  703,920
     Accounts receivable, less allowance for doubtful
         accounts of  $104,800 and $110,800                        2,329,776       2,906,843
     Inventories - net                                             1,251,282       1,083,662
     Notes and loans receivable - current portion                    324,851         350,822
     Notes and loans receivable - officers - current portion          28,490          32,311
       Prepaid expenses and other current assets                     606,363         343,536
     Deferred income taxes                                           170,829         246,632
                                                                  ----------      ----------



         Total current assets                                      5,118,790       5,667,726
                                                                  ----------      ----------

PROPERTY, PLANT AND EQUIPMENT - net                                  439,450         187,454
                                                                  ----------      ----------

OTHER ASSETS:
     Deferrred income taxes                                        1,502,395       1,502,395
     Note receivable - net of current portion                        191,437         345,766
     Property and equipment held for sale                                 --         154,200
     Notes and loans receivable - officers - net of
         current portion                                              80,418          83,962
     Deferred debt costs                                              58,737          85,161
     Other assets                                                     61,160          59,412
                                                                  ----------      ----------

                                                                   1,894,147       2,230,896
                                                                  ----------      ----------

                                                                  $7,452,387      $8,086,076
                                                                  ==========      ==========
</TABLE>


              The accompanying notes are an integral part of these
                             financial statements.


                                       3
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                       March 31,       September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                     1999               1998
------------------------------------                                  -----------       -----------
                                                                      (Unaudited)
<S>                                                                   <C>               <C>
 CURRENT LIABILITIES:
     Borrowings under credit line                                     $   815,871       $ 1,244,103
     Accounts payable                                                   1,717,732         1,215,572
     Convertible notes payable                                                 --           554,000
     Notes payable - related party                                         12,524            42,670
     Accrued expenses and other current liabilities                       606,919         1,218,574
     Accrued severance to officer                                         150,000           350,000
                                                                      -----------       -----------

              Total current  liabilities                                3,303,046         4,624,919
                                                                      -----------       -----------

COMMITMENTS

STOCKHOLDER'S EQUITY:
     Preferred stock, 4,000,000 authorized shares par
              value $.01; none issued                                          --                --
     Common stock, 40,000,000 authorized shares, par value
              $.01; issued 6,093,031 shares and 4,963,031 shares
              (including 164,890 held in treasury)                         60,930            49,630
     Paid-in capital                                                    7,370,453         6,551,703
Accumulated deficit                                                    (3,047,642)       (2,884,346)
     Comprehensive income adjustment                                        3,713           (17,717)
                                                                      -----------       -----------
                                                                        4,387,454         3,699,270
     Less:    Cost of  shares in treasury                                 238,113           238,113
                                                                      -----------       -----------

              Total stockholders' equity                                4,149,341         3,461,157
                                                                      -----------       -----------

                                                                      $ 7,452,387       $ 8,086,076
                                                                      ===========       ===========
</TABLE>


              The accompanying notes are an integral part of these
                             financial statements.


                                       4
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         Three Months Ended                  Six Months Ended
                                                              March 31,                          March 31,
                                                    ------------------------------     -----------------------------
                                                        1999              1998             1999             1998
                                                    ------------      ------------     ------------     ------------
<S>                                                 <C>               <C>              <C>              <C>         
NET SALES                                           $  3,635,602      $  2,805,437     $  7,598,735     $  6,198,291
COST OF GOODS SOLD                                     2,624,100         1,899,157        5,401,920        4,163,928
                                                    ------------      ------------     ------------     ------------
GROSS PROFIT                                           1,011,502           906,280        2,196,815        2,034,363
                                                    ------------      ------------     ------------     ------------
OPERATING EXPENSES:
      Distribution                                        10,670             1,487           20,066            8,320
      Selling                                            362,504           329,003          732,188          658,177
      General and administration                         654,285           544,233        1,305,788        1,144,275
                                                    ------------      ------------     ------------     ------------
                                                       1,027,459           874,723        2,058,042        1,810,772
                                                    ------------      ------------     ------------     ------------

INCOME FROM OPERATIONS                                   (15,957)           31,557          138,773          223,591
                                                    ============      ============     ============     ============
OTHER INCOME (DEDUCTIONS):
      Interest expense                                   (24,184)          (67,443)         (70,523)        (143,943)
      Interest expense - related parties                    (563)           (1,583)          (1,513)          (7,613)
      Interest income                                     15,995            32,488           40,633           68,505
      Rental income - net                                     --                --               --          (60,730)
      Other income - net                                  82,614            19,564           82,137          602,371
                                                    ------------      ------------     ------------     ------------
                                                          73,862           (16,974)          50,734          458,590
                                                    ------------      ------------     ------------     ------------
INCOME BEFORE PROVISION
      FOR INCOME TAXES                                    57,905            14,583          189,507          682,181
PROVISION FOR INCOME TAXES                                23,162             5,833           75,803          272,873
                                                    ------------      ------------     ------------     ------------
INCOME BEFORE EXTRAORDINARY ITEM                          34,743             8,750          113,704          409,308
                                                    ------------      ------------     ------------     ------------
EXTRAORDINARY ITEM:
      Non-cash interest charge upon conversion
      of promissory notes (net of income tax
      benefit of $ -0-) (Note 4)                              --                --         (277,000)              --
                                                    ------------      ------------     ------------     ------------

NET INCOME                                          $     34,743      $      8,750     $   (163,296)    $    409,308
                                                    ============      ============     ============     ============
NET INCOME  PER COMMON AND COMMON
      EQUIVALENT SHARE:
         Basic:
               Income before extraordinary item     $       0.01      $       0.00     $       0.02     $      0 .09
               Extraordinary item                             --                --            (0.05)              --
                                                    ------------      ------------     ------------     ------------
                                                    $       0.01      $       0.00     $      (0.03)    $       0.09
                                                    ============      ============     ============     ============
         Diluted:
               Income before extraordinary item     $       0.01      $       0.00     $       0.02     $       0.07
               Extraordinary Item                             --                --            (0.05)              --
                                                    ------------      ------------     ------------     ------------
                                                    $       0.01      $       0.00     $      (0.03)    $       0.07
                                                    ============      ============     ============     ============
WEIGHTED AVERAGE NUMBER OF
    COMMON SHARES                                      5,913,474         4,723,141        5,540,475        4,528,141
                                                    ============      ============     ============     ============

DIVIDENDS                                                NONE             NONE             NONE              NONE

</TABLE>


                                       5
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF
                              COMPREHENSIVE INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                          Six Months Ended
                                                              March 31,
                                                     ---------------------------
                                                       1999               1998
                                                     ---------          --------
<S>                                                  <C>                <C>     
NET INCOME (LOSS)                                    $(163,296)         $409,308


COMPREHENSIVE INCOME ADJUSTMENTS:
       Foreign currency translation                     21,430                --
                                                     ---------          --------


COMPREHENSIVE INCOME (LOSS)                          $(141,866)         $409,308
                                                     =========          ========
</TABLE>






   The accompanying notes are an integral part of these financial statements


                                       6
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                             March 31,
                                                                   -----------------------------
                                                                      1999              1998  
                                                                   -----------       -----------
<S>                                                                <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                    $  (163,296)      $   409,308
     Adjustments to reconcile net income to net cash provided
         by (used in) continuing operations:
              Extraordinary interest charge                            277,000                --
              Gain on sale of property and equipment                   (73,769)         (581,771)
              Depreciation and amortization                             27,705            35,294
              Amortization of deferred debt costs                       29,235            48,023
              Deferred taxes                                            75,803           272,873
              Non-cash compensation                                         --            34,191
     Changes in assets and liabilities:
                 Accounts receivable                                   577,067         1,209,554
                 Inventories                                          (167,620)         (297,382)
                 Prepaid expenses and other current assets             (72,071)         (140,208)
                 Other assets                                           (1,748)          (33,948)
                 Accounts payable                                      502,160        (1,084,522)
                 Accrued expenses and other current liabilities       (611,655)         (103,977)
               Accrued severance to officer                           (200,000)               --


NET CASH (USED IN) PROVIDED BY OPERATIONS                              198,811          (232,565)
                                                                   -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net proceeds from sale of property and equipment                   37,215           643,830
     Proceeds from notes and loans receivable                          180,301           634,995
     Proceeds from collections from officers                             7,365            28,500
     Purchases of property, plant and equipment                       (279,704)          (81,506)
                                                                   -----------       -----------

NET CASH PROVIDED BY
     INVESTING ACTIVITIES                                              (54,823)        1,225,819
                                                                   -----------       -----------
</TABLE>


        The accompanying notes are an integral part of the consolidated
                             financial statements.

                                       7
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                        March 31,
                                                             -----------------------------
                                                                1999              1998
                                                             -----------       -----------
<S>                                                          <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from (repayment of) short-term borrowings         (428,232)         (149,665)
     Proceeds from long-term notes                                    --            10,000
     Payments of long-term notes                                      --          (225,001)
     Payments of mortgage                                             --        (1,057,748)
     Payments of notes payable - related parties                 (30,146)          (15,000)
     Proceeds from issuances of stock                             11,000           292,500
     Deferred offering costs                                     (11,950)          (23,532)
     Deferred debt costs                                          (2,811)          (21,292)
                                                             -----------       -----------

NET CASH USED IN FINANCING ACTIVITIES                           (462,139)       (1,189,738)
                                                             -----------       -----------

EFFECT OF EXCHANGE RATE CHANGES                                   21,430                --
                                                             -----------       -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                         (296,721)         (196,484)

CASH AND CASH EQUIVALENTS - beginning                            703,920         1,365,198
                                                             -----------       -----------

CASH AND CASH EQUIVALENTS - ending                           $   407,199       $ 1,168,714
                                                             ===========       ===========

SUPPLEMENTAL DISCLOSURES OF
     CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest                                            $    30,068       $    40,835
         Income taxes                                        $    16,558       $    10,422

SCHEDULE OF NON-CASH ACTIVITES:
     Discount on repayment of mortgage debt                  $        --       $    55,529
     Offset of deferred offering costs to paid in capital    $        --       $    90,474
     Warrants issued for services rendered                   $        --       $    10,417
     Issuance of common stock upon conversion of
               long-term debt                                $   554,000       $        --
     Issuance of promissory notes upon closing of
         Private Placement Units                             $        --       $   185,000
     Sale of property and equipment held for sale            $   190,554       $        --

</TABLE>


         The accompanying notes are an integral part of the consolidated
                             financial statements.


                                       8
<PAGE>

                    FORWARD INDUSTRIES, INC.AND SUBSIDAIRIES

                              NOTES TO FORM 10-QSB

                    SIX MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (UNAUDITED)


1.   BASIS OF PRESENTATION

     The information in this Form 10-QSB includes the results of operations of
     Forward Industries, Inc. ("the Company") and its wholly-owned subsidiary,
     Koszegi Industries, Inc. ("Koszegi"), for the periods ended March 31, 1999
     and 1998. The data is unaudited, but includes all adjustments including the
     elimination of intercompany accounts and transactions which are, in the
     opinion of management, necessary for a fair presentation of the interim
     periods presented.

     The accounting policies utilized in the preparation of this Form 10-QSB are
     the same as those set forth in the Company's annual Form 10-KSB for the
     fiscal year ended September 30, 1998 and should be read in conjunction with
     the disclosures presented therein.

     Certain prior period balances have been reclassified to conform to the
     current period classification.

     All information in this Form 10-QSB has been adjusted to give effect for a
     one-for-two reverse stock split, as declared by the Board of Directors, of
     the Company's issued and outstanding common stock, par value $.01 per
     share, effected on December 23, 1997.

     This Quarterly Report may contain forward-looking statements which involve
     certain risks and uncertainties. Important factors could arise, including
     those identified in "Risk Factors" in the Company's form 10-KSB for the
     year ended September 30, 1998, which could cause the Company's operating
     results to differ materially from those contained in any forward looking
     statement.


2.   EARNINGS PER SHARE

     Earnings per share are based on the weighted average number of shares
     outstanding during each period presented. The Company has adopted FAS 128,
     "Earnings Per Share" and has restated prior periods to comply with the
     provisions of this pronouncement.


3.   BORROWINGS UNDER CREDIT LINE

     In April 1998, the Company established a credit facility with a new bank
     which provides for a maximum line of credit for working capital of $4.5
     million, including letters of credit. Borrowing availability is based on a
     formula of accounts receivable and inventory. At March 31, 1999 amounts
     outstanding were $816,000. In addition, the Company was contingently liable
     under letters of credit and acceptances in the amount of $1,009,100. The
     credit agreement provides for certain financial covenants to which Forward
     and Koszegi were in compliance.


4.   ISSUANCE OF COMMON STOCK FOR PROMISSORY NOTES

     In December 1997, the Company consummated a private offering of securities
     consisting of units ("Units"), each Unit comprised of (i) 30,000 shares of
     Common Stock, (ii) one warrant (a "Private Placement Warrant") to purchase
     up to 30,000 shares of Common Stock at $4.00 per share and (iii) one
     unsecured convertible promissory note (a "Note") in the principal amount of
     $10,000, bearing interest at a rate of 10% per annum (convertible at the
     sole option of the Company under certain circumstances, into 20,000 shares
     of Common Stock and one Private Placement Warrant) maturing on December 4,
     1998. A total of 55.4 Units were sold for $25,000 per unit, aggregating
     gross proceeds of $1,385,000. Included in the Units sold was $554,000
     aggregate principal amount of convertible promissory notes. On December 4,
     1998, the Company exercised its


                                       9
<PAGE>

     option to convert all of such Notes into a total of 1,108,000 shares of
     Common Stock and Private Placement Warrants to purchase 1,662,000 shares of
     Common Stock (such warrants expired on March 15, 1999 and are no longer
     outstanding). Interest, which had accrued on such Notes of approximately
     $72,000, was paid on that date.

     In connection with the conversion of its Notes into Common Stock, the
     Company recorded a non-cash, extraordinary charge against earnings of
     $277,000. This amount, recorded as interest expense, reflects the
     difference between the average bid and asked price per share of the
     Company's stock on December 4, 1998 (the date on which such conversion
     occurred) on the Nasdaq SmallCap Market, $.75, and, the price at which the
     Company converted such shares, $.50, aggregated by the total shares issued.
     No tax benefit has been recorded in connection with this interest charge as
     it is not deductible for federal income taxes.


5.   INVENTORY

     Inventory consists of the following:

                                     March 31, 1999         September 30, 1998
                                     --------------         ------------------
                                      (Unaudited)

           Raw materials              $     92,607              $   101,859
           Work in process                      --                  119,095
           Finished goods                1,158,675                  862,708
                                      ------------              -----------
                                      $  1,251,282              $ 1,083,662
                                      ============              ===========

6.   SALE OF ASSETS

     In December 1997, the Company sold a building for $830,000 and recognized a
     profit of approximately $669,000. Such profit is included in other income
     in the consolidated statement of income for the six months ended March 31,
     1998.

     During the quarter ended March 31, 1999, the Company sold certain
     production equipment and recognized a profit of approximately $74,000. The
     profit is included in other income in the consolidated statement of income
     for the three months and six months ended March 31, 1999.




                                       10
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE

<TABLE>
<CAPTION>

                                                                                THREE MONTHS ENDED MARCH 31,
                                                                         -------------------------------------------
                                                                             1999                           1998
                                                                         -------------                  ------------
<S>                                                                      <C>                <C>         <C>
NUMERATOR

   Income from continuing operations:
     Income from continuing operations:                                  $      34,743                  $      8,750
     Less:  Preferred dividends                                                     --                            --
                                                                         -------------                  ------------

     Income available to common stockholders
used in basic EPS                                                               34,743      BASIC              8,750

     Impact of potential common shares:
       Convertible debt                                                             --                         8,310
                                                                         -------------                  ------------
     Income available to common stockholders after
       assumed conversions of dilutive securities                        $      34,743      DILUTED     $     17,060
                                                                         =============                  ============

DENOMINATOR

   Weighted average number of common shares
     outstanding  - See schedule                                             5,913,474      BASIC          4,723,141

   Impact of potential common shares:
     Stock options and warrants                                                137,935                       504,514
     Convertible debt                                                              N/A                     1,108,000
                                                                         -------------                  ------------
   Weighted average number of common shares and
     dilutive potential common stock used in dilutive EPS                    6,051,409      DILUTED        6,335,655

BASIC EPS
   Income from continuing operations                                     $        0.01                  $       0.00

DILUTED EPS

   Income from continuing operations                                     $        0.01                  $       0.00

</TABLE>


                                       11
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                           MARCH 31,
                                                                                  --------------------------
                                                                                     1999            1998
                                                                                  ----------      ----------
<S>                                                                               <C>             <C>
CALCULATIONS

1.  Stock Options

        Treasury Stock Method Applied to Stock Options
        Sale of common stock
           Total options and warrants outstanding                                    496,800       1,271,250
            Average price                                                         $     0.86      $     1.82
                                                                                  ----------      ----------

                           Total                                                  $  428,400      $2,311,250
                                                                                  ==========      ==========

        Repurchase of common stock
           Proceeds                                                               $  428,400      $2,311,250
            Average stock price                                                   $     1.19      $     3.01
                                                                                  ----------      ----------

            Shares repurchased                                                       358,865         766,736
                                                                                  ==========      ==========

        Net increase in shares
            Shares sold                                                              496,800       1,271,250
            Shares repurchased                                                       358,865         766,736
                                                                                  ----------      ----------

            Increase in shares                                                       137,935         504,514
                                                                                  ==========      ==========

2.  Convertible debt

            Terms:
               Interest rate                                                                              10%
               Par                                                                                $   10,000
               Convertible into shares                                                                20,000
               Conversion price                                                                          N/A
               # of units                                                                         $       55
            Total debt                                                                            $  554,000

            If-converted Method Applied to Convertible Debt

            Numerator increase - interest savings assuming
               a 40% tax rate                                                     $       --      $    8,310
                                                                                  ==========      ==========

            Denominator increase - assuming conversion
                                                                                          --       1,108,000
                                                                                  ==========      ==========
</TABLE>


                                       12
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE


Computation of Weighted Average Number of Common Shares Outstanding


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED MARCH 31, 1999
                                                       ---------------------------------
                                                                                          Weighted
              Dates                             Shares               Fraction of          Average
           Outstanding                        Outstanding              Period              Shares
           -----------                        -----------              ------              ------
<S>                                            <C>                       <C>              <C>      
January through February                       5,906,141                 2/3              3,937,427

Common stock issued in connection with
     conversion of Class B warrants               22,000
                                               ---------

March                                          5,928,141                 1/3              1,976,047
                                                                                          ---------

Weighted Average Shares                                                                   5,913,474
                                                                                          =========
</TABLE>


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED MARCH 31, 1998
                                                       ---------------------------------
                                                                                          Weighted
              Dates                             Shares               Fraction of          Average
           Outstanding                        Outstanding              Period              Shares
           -----------                        -----------              ------              ------
<S>                                            <C>                       <C>              <C>      

January through March                          4,723,141                 3/3              4,723,141
                                                                                          ---------

Weighted Average Shares                                                                   4,723,141
                                                                                          =========

</TABLE>



                                       13
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
                                                                                 SIX MONTHS ENDED MARCH 31,
                                                                         -------------------------------------------
                                                                            1999                            1998
                                                                         -----------                     -----------
<S>                                                                      <C>                             <C>
NUMERATOR

   Income from continuing operations:
     Income from continuing operations:                                  $   113,704                     $   409,308
     Less:  Preferred dividends                                                   --                              --
                                                                         -----------                     -----------

     Income available to common stockholders
used in basic EPS                                                            113,704      BASIC              409,308

     Impact of potential common shares:
       Convertible debt                                                           --                          16,620

     Income available to common stockholders after
       assumed conversions of dilutive securities                        $   113,704      DILUTED        $   425,928
                                                                         ===========                     ===========

Loss from extraordinary item                                             $  (277,000)                    $        --
                                                                         ===========                     ===========



DENOMINATOR

   Weighted average number of common shares
     outstanding  - See schedule                                           5,540,474      BASIC            4,528,141

   Impact of potential common shares:
     Stock options and warrants                                              100,263                         395,197
     Convertible debt                                                            N/A                       1,108,000
                                                                         -----------                     -----------
   Weighted average number of common shares and
     dilutive potential common stock used in dilutive EPS                  5,640,737      DILUTED          6,031,338
                                                                         ===========                     ===========

BASIC EPS

   Income from continuing operations                                     $      0.02                     $      0.09
   Extaordinary Item                                                           (0.05)                           0.00
                                                                         -----------                     -----------
                                                                         $     (0.03)                    $      0.09
                                                                         ===========                     ===========

DILUTED EPS

   Income from continuing operations                                     $      0.02                     $      0.07
   Extraordinary Item                                                          (0.05)                           0.00
                                                                         -----------                     -----------
                                                                         $     (0.03)                    $      0.07
                                                                         ===========                     ===========
</TABLE>


                                       14
<PAGE>

                    FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED
                                                                MARCH 31,
                                                         ------------------------
                                                           1999           1998
                                                         --------      ----------
<S>                                                      <C>           <C>
CALCULATIONS

1.  Stock Options

     Treasury Stock Method Applied to Stock Options
     Sale of common stock
        Total options and warrants outstanding            196,800       1,271,250
         Average price                                   $   0.50      $     1.84


                        Total                            $ 98,400      $2,335,469
                                                         ========      ==========

     Repurchase of common stock
        Proceeds                                         $ 98,400      $2,335,469
         Average stock price                             $   1.02      $     2.67
                                                         --------      ----------

         Shares repurchased                                96,537         876,053
                                                         ========      ==========

     Net increase in shares
         Shares sold                                      196,800       1,271,250
         Shares repurchased                                96,537         876,053
                                                         --------      ----------

         Increase in shares                               100,263         395,197
                                                         ========      ==========

3.  Convertible debt

         Terms:
            Interest rate                                                      10%
            Par                                                        $   10,000
            Convertible into shares                                        20,000
            Conversion price                                                  N/A
            # of units                                                 $       55
         Total debt                                                    $  554,000

         If-converted Method Applied to Convertible Debt

         Numerator increase - interest savings assuming
            a 40% tax rate                               $      -      $   16,620
                                                         ========      ==========

         Denominator increase - assuming conversion             -       1,108,000
                                                         ========      ==========
</TABLE>


                                       15
<PAGE>

                   FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

               EXHIBIT 11 - COMPUTATION OF INCOME PER COMMON SHARE


Computation of Weighted Average Number of Common Shares Outstanding


<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED MARCH 31, 1999
                                                       -------------------------------
                                                                                          Weighted
              Dates                             Shares               Fraction of          Average
           Outstanding                        Outstanding              Period              Shares
           -----------                        -----------              ------              ------
<S>                                            <C>                       <C>              <C>      

October through November                       4,798,141                 2/6              1,599,380

Common stock issued in connection with
     conversion of private placement debt
     in December                               1,108,000
                                               ---------

December  through February                     5,906,141                 3/6              2,953,071

Common stock issued in connection with
     conversion of Class B warrants               22,000
                                                  ------

March                                          5,928,141                 1/6                988,024
                                                                                          ---------

Weighted Average Shares                                                                   5,540,475
                                                                                          =========
</TABLE>


<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED MARCH 31, 1998
                                                       -------------------------------
                                                                                          Weighted
              Dates                             Shares               Fraction of          Average
           Outstanding                        Outstanding              Period              Shares
           -----------                        -----------              ------              ------
<S>                                            <C>                       <C>              <C>      
October through November                       4,138,141                 2/6              1,379,380

Common stock issued in connection
    with private placement in December           585,000
                                               ---------

December  through March                        4,723,141                 4/6              3,148,761
                                                                                          ---------

Weighted AverageShares                                                                    4,528,141
                                                                                          =========
</TABLE>


                                       16
<PAGE>

PART I.  ITEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                   AND RESULTS OF OPERATIONS


     The following discussion and analysis should be read in conjunction with
the Company's Financial Statements and the notes thereto appearing elsewhere in
this Report. This Report contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The Company cautions that forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, (including those
identified in "Risk Factors" in the Company's form 10-KSB for the year ended
September 30, 1998) and that actual results may differ materially from those in
the forward-looking statements as a result of various factors.

     The following discussion and analysis compares the results of the Company's
continuing operations for the Three and Six Months ended March 31, 1999, and the
Three and Six Months ended March 31, 1998.

THREE MONTHS ENDED MARCH 31, 1999 (THE "1999 QUARTER") COMPARED TO THREE MONTHS
ENDED MARCH 31, 1998 (THE "1998 QUARTER")

     The 1999 Quarter reflected net income of $34,700 compared to net income of
$8,800 in the 1998 Quarter. Basic and diluted earnings per share from continuing
operations increased from $0.00 in the 1998 Quarter to $0.01 in the 1999
Quarter.

REVENUES.

     Net sales increased $830,200 (30%) to $3,635,600 in the 1999 Quarter, from
$2,805,400 in the 1998 Quarter. The increase is attributable to growth in
business from both existing and new customers, and specifically to the Company's
expansion efforts in its European operations and customer accounts.

OPERATING INCOME.

     Consolidated pretax income from continuing operations increased by $43,300
to a profit of $57,900 in the 1999 Quarter, from $14,600 in the 1998 Quarter.
This improvement resulted primarily from $105,200 in increased gross margin from
higher sales, $90,800 in increases from other income items which included the
sale of miscellaneous equipment, offset by $152,700 in increases in selling,
general administrative expenses and distribution, more fully described below.
The gross margin percentage declined from 32% in the 1998 Quarter to 28% in the
1999 Quarter. The decrease relates substantially to increased costs and
expenditures associated with the Company's Hong Kong quality assurance and
distribution facility. Greater expenditures were required as overseas production
demand increased due to customer requirements and as a result of the shutdown of
the South Bend facility. In addition, costs were also incurred for upgrading
operating standards to obtain ISO 9002 certification at the Hong Kong facility.

     Selling expenses increased $33,500 (10%) from $329,000 in the 1998 Quarter
to $362,500 in the 1999 Quarter due to increases in salaries, wages and benefits
for both domestic and European sales staff, higher travel expenses and customer
design fees, offset by lower commissions and costs for samples. However, the
ratio of selling expenses to net sales declined from 12% to 10%, due to increase
in revenues.

     General and administrative expenses decreased as a percentage of net sales
to 18% in the 1999 Quarter from 19% in the 1998 Quarter but the dollar amount of
expenses increased $110,100 (20%) to $654,300 in the 1999 Quarter from $544,200
in the 1998 Quarter. The increase is primarily related to payroll increases
associated with a new management team including the Chief Executive Officer
position, higher professional fees, public relations expenses and telephone
costs, partially offset by lower travel costs.

OTHER INCOME (DEDUCTIONS).

     Total interest expenses decreased by $44,300 to $24,700 in the 1999 Quarter
from $69,000 in the 1998 Quarter. The decrease was due to lower interest rates,
better collections of accounts receivable resulting in lower outstanding bank
borrowings, and lower interest due to the conversion of notes payable into
common stock in the 1999 Period. Interest income and other income-net increased
$45,500 to $98,600 in the 1999 Quarter from the $52,100 in the 1998 Quarter. The
increase is primarily related to the sale of certain miscellaneous assets no
longer required as a result of the shutdown of the South Bend facility.


                                       17
<PAGE>

INCOME TAXES.

     The provision for income taxes increased by $17,300 to $23,200 due to an
increase in pretax profits in the 1999 Quarter from the comparable period in the
1998 Quarter. The effective tax rates for the 1999 and 1998 Quarters were 40%.

SIX MONTHS ENDED MARCH 31, 1999 (THE "1999 PERIOD") COMPARED TO SIX MONTHS ENDED
MARCH 31, 1998 (THE "1998 PERIOD")

     The 1999 Period reflected a net loss of ($163,300) compared to net income
of $409,300 in the 1998 Period. However, after excluding certain non-recurring
items, net income improved by nearly $105,800. Excluding the gain on the sale of
a building in the 1998 Period of $401,400, the operations generated a net gain
of approximately $7,900. In the 1999 Period, operations generated net income of
$113,700 prior to the extraordinary non-cash charge of $277,000 described below.
Basic earnings per share from continued operations decreased from $0.09 in the
1998 Period to $0.02 in the 1999 Period, while diluted earnings per share from
continuing operations decreased from $0.07 in the 1998 Period to $0.02 in the
1999 Period.

REVENUES.

     Net sales increased $1,400,400 (23%) to $7,598,700 in the 1999 Period, from
$6,198,300 in the 1998 Period. The increase is attributable to growth in
business from both existing and new customers and specifically attributable to
the Company's expansion efforts in its European business and customer accounts.


OPERATING INCOME.

     Consolidated pretax income from continuing operations decreased by $492,700
to a profit of $189,500 in the 1999 Period, from $682,200 in the 1998 Period.
The decrease is wholly related to the gain on the sale of the Company's
building, representing $669,000 before tax, in the 1998 Period. Excluding this
item, the comparison would show a pretax operating income of $13,200 in the 1998
Period compared with pretax operating income in the 1999 Period of $189,500, an
increase of $176,300. The increase in pretax profits relates primarily to an
increase in gross margin of $162,400 resulting from higher sales, decreases in
interest expense, $79,500, and increases in other income items $181,600, offset
by increases in selling, distribution, general and administrative expenses of
$247,300, each described below.

     Gross margin percentage decreased from 32% in the 1998 Period to 28% in the
1999 Period. Approximately 2% of the change was for increased expenditures at
the Company's Hong Kong quality control center to meet the demands and costs of
increased business, as well as upgrading its operating standards for IS0 9002
Certification. The remainder of the margin percentage difference is related to
changes in the sales mix.

     Selling expenses increased $74,000 (11%) from $658,200 in the 1998 Period
to $732,200 in the 1999 Period due to increases in salaries both domestically
and in Europe, increased travel expenses, increased rent for expanding the
European operations and expenses for designs and printing, offset by a reduction
in advertising. The ratio of selling expenses to net sales declined from 11% to
10%, because of an increase in revenues.

     General and administrative expenses decreased as a percentage of net sales,
to 17% in the 1999 Period from 18% in the 1998 Period but the dollar amount of
expenses increased $161,500 (14%) to $1,305,800 in the 1999 Period from
$1,144,300 in the 1997 Period. The increase is primarily related to higher
payroll expenses for expanding the senior management team, including a new Chief
Executive Officer, higher professional fees and telephone costs offset by lower
travel expenses.


OTHER INCOME (DEDUCTIONS). 

     Total interest expense decreased by $79,600 to $72,000 in the 1999 Period
from $151,600 in the 1998 Period. The decrease was due to lower interest rates,
better collections of accounts receivable resulting in lower outstanding bank
borrowings, the conversion of notes payable into common stock in the 1999
Period, and the repayment of the mortgage on the Company's building in December
1997.


                                       18
<PAGE>

     The Company's rental building in Brooklyn, New York was sold in December
1997. As a result, rental income - net decreased from a loss of ($60,700) in the
1998 Period to zero in the 1999 Period.

     Interest income and other income - net decreased $487,300 to $122,800 in
the 1999 Period from the $610,100 1998 Period. The decrease is primarily related
to the gain on the sale of the Brooklyn building of $669,000, recorded in
December 1997.

EXTRAORDINARY ITEM.

     In December 1997, the Company consummated a private offering of securities
which included $554,000 in aggregate principal amount of convertible Promissory
Notes. The Notes were converted into Common Stock and warrants in December 1998,
at the option of the Company. In connection with the conversion of its Notes
into Common Stock, the Company recorded a non-cash, extraordinary charge against
earnings of $277,000. This amount, recorded as interest expense, reflects the
difference between the average bid and asked price per share of the Company's
stock on December 4, 1998 (the date on which such conversion occurred) on the
Nasdaq SmallCap Market, $.75, and, the price at which the Company converted such
shares, $.50, aggregated by the total shares issued. There was no comparable
item in the 1998 Quarter.

INCOME TAXES.

     The provision for income taxes decreased by $197,100 due to a $219,800
decrease in pretax profits in the 1999 Period from the comparable period in 1998
Period. The effective tax rates for the 1998 and 1997 Quarters were 40%. No tax
benefit was recorded relating to the extraordinary interest charge as it is not
deductible for income tax purposes.

LIQUIDITY AND CAPITAL RESOURCES.

     In the 1999 Period, $198,800 of cash was generated by operating activities.
This increase in operating funds resulted primarily from a decrease in accounts
receivable of $577,100 and the add back of a non-cash extraordinary charge of
$277,000 and depreciation and amortization charges of $56,900. Offsetting these
amounts were a net loss in the 1999 Period of ($163,300); decreases in accounts
payable and accrued expenses of $309,500; an increase in inventories of
$167,600; and an increase in prepaid and other assets of $72,100.

     Net investing activities in the 1999 Period used cash of $54,800. The
Company collected $180,300 of notes receivable, which arose from the sale of its
discontinued operations in 1997, $7,400 of loans made to its officers, and
received $37,200 from the sale of assets. In the 1999 Period, the Company
purchased $279,700 of property, plant and equipment.

     Financing activities in the 1999 Period used cash of $462,100. Funds were
used for payments of borrowing under the bank credit line of $428,200, note
payments to a related party of $30,100 and $14,800 for expenses in connection
with the note conversion described below and debt costs. Offsetting this amount
were $11,000 of funds received from the exercise of warrants into common shares.

     As of March 31, 1999, there remained outstanding warrants exercisable for
197,000 shares at $.50 per share, which were scheduled to expire February 1,
1999. On January 28, 1999, the Company extended such expiration date to
September 30, 1999. The Company's Common Stock is traded on the Nasdaq SmallCap
Market and, during the first days immediately proceeding April 30, 1999 was
trading in the range of approximately $1.60 per share. The Company anticipates
that holders of its remaining outstanding warrants will continue to exercise
such warrants only if the Common Stock trades at a substantial premium over the
exercise price of the warrants, of which there can be no assurance.

     During Fiscal 1997 and in December 1997, the Company consummated the 1997
Private Placement of Units. Each Unit was comprised of (i) 30,000 shares of
Common Stock, (ii) one Private Placement Warrant to purchase up to 30,000 shares
of Common Stock at $4.00 per share and (iii) one unsecured convertible
promissory note. The "Note" in the principal amount of $10,000, bearing interest
at a rate of 10% per annum (convertible at the sole option of the Company under
certain circumstances, into 20,000 shares of Common Stock and one Private
Placement Warrant) maturing on December 4, 1998. A total of 55.4 Units were sold
for $25,000 per unit, aggregating gross proceeds of $1,385,000. Included in the
Units sold was $554,000 aggregate principal amount of debt. A commission in the
amount of $169,000 was paid by the Company in connection with such sales. The
sales were made to accredited investors pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended. On December 4, 1998, the Company
exercised its option to convert $554,000 of debt into 1,108,000 shares of Common
Stock and warrants to purchase 1,662,000 shares of Common Stock (such warrants
expired on March 15, 1999 and are no longer outstanding), and paid accumulated
interest on the Notes of approximately $72,000. Certain officers and directors
participated in this transaction.


                                       19
<PAGE>

     Forward and Koszegi Industries, Inc., a wholly-owned subsidiary of Forward
("Koszegi"), established a new line of credit with a bank in April 1998 and are
indebted to such bank for short-term borrowings and letters of credit. The total
line is for $4,500,000. The line of credit is scheduled to mature on March 31,
2001. Borrowing availability is determined based on a formula of accounts
receivable and inventory. The interest rate on the line is the prime rate in
effect from time to time plus three quarters of one percent. The Company secured
this line of credit with all of its assets and those of Koszegi. An additional
$500,000 is available to finance equipment. The Company used the new credit
availability to pay its outstanding indebtedness on its former credit line of
$937,000. The former credit line had a maximum availability of $1,100,000 of
which $750,000 was reserved for letters of credit (acceptances). In addition,
the Company also used the facility to repay outstanding letters of credit
financed by a third party. The new facility contains certain financial covenants
for which the Company was in compliance. Amounts owed the bank at March 31, 1999
including contingent liability for letters of credit were $1,825,100; there
remained approximately $370,400 of additional availability.

     In December 1997, the Company sold its building in Brooklyn, New York for
$830,000 and recognized a gain of approximately $669,000. The proceeds of the
sale were used to pay down the balance of the mortgage.

     In September 1998, the Company commenced a plan which it believes will
streamline its operations and reduce its cost structure over time. The Company
announced a plan of restructuring, and recorded restructuring charges for its
fiscal year ended September 30, 1998, pursuant to which it closed its South
Bend, Indiana manufacturing operations on February 28, 1999, but continued to
provide any required domestic manufacturing through a contractual arrangement
with MedCovers, Inc., of Raleigh, North Carolina. However, the vast majority of
the Company's orders are now manufactured overseas. Under the agreement, the
Company sold to MedCovers certain key production equipment, and is providing
technical support and quality assurance personnel at MedCovers factory. The
Company incurred expenditures during the current quarter related to the plant
shutdown, which were accrued at September 30, 1998. Funds for such expenditures
are being paid from existing cash or cash generated by operations.

     In addition, the Company renovated a building, which it owns, adjacent to
its former leased factory in South Bend, to house its remaining sales staff,
customer support and other administrative personnel who remain in Indiana. The
renovation, which was completed at the end of February 1999, at a cost of
approximately $100,000 was paid from the Company's existing funds.

     The Company, like many others which own computer software, has been
required to address the issue of software applications which are unable to
recognize `OO' in their program code. The Company evaluated alternatives to
resolve this problem and concluded that acquiring a new data system, rather than
upgrading its existing systems and applications, was of greater long-term value.
The Company has expended approximately $110,000 during the first two quarters of
fiscal 1999,encompassing the cost of new hardware and software. Such amounts
were paid from existing cash. Hardware and software was installed during
December 1998 and January 1999. The Company has been incurring internal staff
costs associated with training. Cost of staff time will be expensed as incurred,
while cost of the new system will be capitalized and amortized over its useful
life.

     In connection with its restructuring, the Company hired a new Chief
Executive Officer and received the resignation of Mr. Theodore H. Schiffman, its
co-founder and former Chief Executive Officer. Mr. Schiffman received a
five-year consulting arrangement with annual consulting payments of $200,000 per
year and a severance package totaling $350,000, of which $200,000 was paid on
January 1, 1999 and $150,000 is payable on the 15th month anniversary thereof.
Such amounts were and will be paid out of the Company's existing cash position
or from internally generated funds.

     The Company did not incur any other long-term debt in the 1999 Quarter. At
March 31, 1999, there was no long-term debt and all installment note and capital
lease payments were made on a timely basis.


DEFERRED INCOME TAXES.

     The Company's balance sheet at March 31, 1999 includes $1,673,200 of
deferred income taxes as an asset. The Company was profitable in the 1999
Quarter, and in fiscal 1998, before restructuring charges associated with the
non-recurring costs of the shutdown of its South Bend plant, and in the 1998
Quarter. However, to the extent that the Company's operations may not be
profitable in future periods, the Company would not be able to realize the
benefit of its deferred tax assets. Without such deferred tax assets, at March
31, 1999, the Company's stockholder's equity at such date of would have been
reduced by $1,673,200 to a stockholder's equity of $2,447,600 and the Company's
working capital at March 31, 1999 would have been reduced by $170,800 from
$1,787,200 to $1,616,400.


                                       20
<PAGE>

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          On July 15, 1998, Hollco International Limited ("Hollco"), a former
     Asian contractor which manufactured custom carrying cases for the Company,
     commenced a claim against the Company in an amount of $140,500 which Hollco
     alleges that it is owed for cases which it manufactured under order from
     the Company. The Company believes that these charges were offset wholly by
     product defects and rejects as well as additional costs incurred by the
     Company, including air shipment of product to avoid loss of market share.
     The Company had charged Hollco by issuing its invoices for these expenses
     and may file a separate counter suit against Hollco for these and other
     charges to offset any claims of Hollco.

ITEM 2.       CHANGES IN SECURITIES

          On December 30, 1998, the Company amended the terms of its outstanding
     Class B Public Warrants to reduce the exercise price to $0.50 and extend
     the expiration date to February 1, 1999. On January 28, 1999, the Company
     extended such expiration date to September 30, 1999.

          During the Company's fiscal year ended September 30, 1997 and in
     December 1997, the Company consummated its 1997 Private Placement of units
     ("Units"), each unit comprised of (i) 30,000 shares of Common Stock, (ii)
     one warrant to purchase up to 30,000 shares of Common Stock at $4.00 per
     share (a "Private Placement Warrant") and (iii) one unsecured convertible
     promissory note in the principal amount of $10,000, bearing interest at a
     rate of 10% per annum (convertible at the sole option of the Company under
     certain circumstances, into 20,000 shares of Common Stock and one Private
     Placement Warrant) maturing on December 4, 1998. An aggregate of 55.4 units
     were sold for $25,000 per Unit, aggregating gross proceeds of $1,385,000.
     Included in the Units sold was $554,000 aggregate principal amount of debt.
     A commission in the amount of $169,500 was paid by the Company in
     connection with such sales. The sales were made to accredited investors
     pursuant to Regulation D promulgated under the Securities Act of 1933, as
     amended. On December 4, 1998, the Company exercised its option to convert
     all of such notes into a total of 1,108,000 shares of Common Stock and
     Private Placement Warrants to purchase 1,662,000 shares of Common Stock
     (such warrants expired on March 15, 1999 and are no longer outstanding),
     and paid interest which had accrued on the Notes, of approximately $72,000.

          On December 23, 1997, the Company filed a Certificate of Amendment to
     its Certificate of Incorporation so as to effectuate a one-for-two reverse
     stock split of its issued and outstanding Common Stock.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

     None.





                                       21
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

          The Company held its Annual Meeting of Stockholders on March 25, 1999.

          The following matters were voted upon at the Annual Meeting of
Shareholders:

1.   Election of a Board of Directors.

     Name                                   Number of Shares Voted
     ----                                   ----------------------

                                   For               Against           Abstain
                                   ---               -------           -------

     Jerome  E. Ball               4,431,565         9,317                ---

     Theodore H. Schiffman         4,432,445         8,437                ---

     Michael Schiffman             4,431,515         9,367                ---

     Samson Helfgott               4,432,445         8,437                ---

     Noah Fleschner                4,432,395         8,487                ---


2.     Ratification of the appointment of Patrusky, Mintz & Semel as the
       independent auditors and accountants for the Company for the year ending
       September 30, 1999.

                                       Number of Shares
                                       ----------------

                           For              Against           Abstain
                           ---              -------           -------
                         4,417,500          7,382             16,000



ITEM 5.       OTHER INFORMATION

       None.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibit 27:  Financial Data Schedule

(b)    Reports on Form 8-K

       None.



                                       22
<PAGE>

                                    SIGNATURE


In accordance with to the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

Dated:  May 3, 1999
                                          FORWARD SYSTEMS, INC.
                                               (Registrant)


                                          By: /s/ Philip B. Kart
                                              ---------------------------------
                                              PHILIP B. KART
                                              Principal Financial Officer






                                       23