What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2020-12-17 compared with 2019-12-27 · 344 added, 476 removed, 173 unchanged (83% of the section changed)

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Stock

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for our common stock is Nasdaq.

Our common stock is traded under the symbol "FORD".

On December 23, 2019,

Our common stock is traded under the symbol “FORD”.

On November 30, 2020,

the closing price for our common stock was $1.83.

Holders of common stock .

As of December 12,

At November 30, 2020,

there were approximately 75 holders of record of our common stock.

Because many of our shares of common stock are held by

brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented

by these record holders.

Because many of our shares of common stock are held by brokers

and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these

record holders.

We have not paid any

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Recent Sales of Unregistered Securities

SELECTED FINANCIAL DATA

FINANCIAL DATA

Not applicable.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

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this report on Form 10-K.

In addition to historical information, this discussion and analysis contains forward-looking statements

that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking

statements as a result of certain factors, including but not limited to those set forth under “Risk Factors.”

All dollar amounts and percentages presented herein have been rounded to approximate values.

to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties,

and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result

of certain factors, including but not limited to those set forth under “Risk Factors.”

Cautionary statement regarding Forward-Looking Statement

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Expectations regarding having our products in retail outlets;

Expectations regarding the timing and success of integrating IPS in the Company’s historical

Expectations regarding the timing and success of integrating Kablooe in the Company’s historical business;

as well as other statements regarding our

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Forward Industries,

designs and distributes carry and protective solutions, primarily for hand held electronic devices.

The Company’s principal

customer market is original equipment manufacturers, or “OEMs”

(or the contract manufacturing firms of these distribution

customers), that either package our products as accessories “in box”

together with their branded product offerings,

or sell them through their retail distribution channels.

The Company’s distribution products include carrying cases and other

accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic products (such

as sporting and recreational products, bar code scanners, smartphones, GPS location devices, tablets, firearms).

The Company’s

distribution customers are located in (i) the Asia-Pacific Region, which we refer to as the “APAC Region”;

the Middle East, and Africa, which we refer to as the “EMEA Region”;

and (iii) the Americas.

The Company does not manufacture

any of its distribution products and sources substantially all of its distribution products from independent suppliers in China,

through Forward China.

As a result of the

expansion of the design development capabilities through its wholly owned subsidiary, IPS, the Company now plans to introduce proprietary

products to the market from concepts brought to it from a number of different sources.

The Company provides clients, both big and

small, a true, authentic "one-stop-shop"

for product design, development, distribution and manufacturing solutions.

On January 29, 2019,

the Company entered into a distribution agreement with Mooni AB International.

By virtue of our strategic collaboration and distribution

agreement with Mooni AB International, we have secured a portfolio of smart enabled products which we anticipate will be distributed

to retail outlets in the United States.

As a result of this collaboration and other product initiatives, the Company began to invest

in and build out a distribution network for retail.

The distribution network will be responsible for getting products into big

box retailers for retail consumption.

This build out is a continuation of our strategy to be a one-stop shop for product development,

manufacture and distribution and represents a significant achievement in completing the strategic process of taking a product from

concept to the consumer.

We anticipate having product in retail outlets by the second fiscal quarter of 2020.

We have built out

a sales team that covers North America by leveraging the manufacturer's representative model.

We have identified and signed agreements

with long standing firms that have years of experience and relationships with the big box retailers that we are targeting in both

United States and Canada.

Through the manufacture

representative agreements we currently have in place, we hope to gain sales coverage to retailers such as Best Buy, Target, Walmart,

Costco, CVS, Walgreens, Staples, Office Depot and many others.

The manufacture representative model allows us to engage and support

a large sales team and cover a lot of territory with a variable cost model as these representatives work on commission only.

On February 13, 2019,

the SEC served certain of the Company’s executive officers and the custodian of records of the Company with subpoenas related

to its investigation on the trading in the Company’s securities surrounding the announcement of the acquisition of IPS.

Company has cooperated with the Staff’s requests and as recently as October 24, 2019 provided the Staff with requested documents.

December 18, 2019, the Company received communication from the SEC and the Staff informed us that the investigation has concluded.

The Company is anticipating a letter from the SEC formalizing the conclusion of the investigation.

is a fully integrated design, development and manufacturing solution provider for top tier medical and technology customers

As a result of the continued expansion of our design development capabilities through our wholly owned subsidiaries,

IPS and Kablooe, we are now able to introduce proprietary products to the market from concepts brought to us from a number of different

sources, both inside and outside the Company.

impacts of the COVID-19 pandemic and any resulting economic impact are largely unknown and could be significant.

possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic

impact may negatively impact our results of operations, cash flows and financial position in future periods as well as that

of our customers, including their ability to pay for our services and choosing to allocate their budgets to new or existing

projects which may or may not require our services.

The long-term financial impact on our business cannot be reasonably

estimated at this time.

As a result, the effects of COVID-19 may not be fully reflected in our financial results until future

Until there is a

vaccine and treatment that is widely distributed, we expect business conditions to remain challenging.

In response to

these challenges, we will continue to focus on those factors that we can control:

closely managing and controlling our

aligning our design and development schedules with demand in a proactive manner as there are changes in market

conditions to minimize our cash operating costs;

pursuing further improvements in the productivity and effectiveness of our

development, selling and administrative activities and, where appropriate, taking advantage of opportunities to enhance our

business growth and profitability strategy.

Additionally,

see Part I., Item 1A.

Risk Factors - The adverse impact of COVID-19 on our businesses will continue for an unknown length of time

and may continue to impact our results of operations.

Variability of Revenues and Results of Operation

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of a particular transaction is specifically dictated by U.S.

GAAP, with no need for management’s judgment of a particular

In other cases, management is required to exercise judgment in the application of accounting principles with respect

to particular transactions.

The impact and any associated risks related to these policies on our business operations are discussed

throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

such policies affect reported and expected financial results.

For a detailed discussion of the applications of these and other

accounting policies, see “Item 8.

Financial Statements and Supplementary Data”

GAAP, with no need for management’s judgment.

In other cases,

management is required to exercise judgment in the application of accounting principles with respect to particular transactions.

The impact and any associated risks related to these policies on our business operations are discussed throughout this “Management’s

Discussion and Analysis of Financial Condition and Results of Operations”

where such policies affect reported and expected

financial results.

For a detailed discussion of the applications of these and other accounting policies, see “Item 8.

Statements and Supplementary Data”

in this Annual Report.

Our preparation

of our Consolidated Financial Statements requires us to make estimates and assumptions that are believed to be reasonable under

the circumstances.

There can be no assurance that actual results will not differ from those estimates and such differences could

be significant.

Our preparation of our Consolidated Financial Statements requires

us to make estimates and assumptions that are believed to be reasonable under the circumstances.

There can be no assurance that

actual results will not differ from those estimates and such differences could be significant.

Revenue Recognition

Distribution Segment

The Company generally

recognizes revenue from its distribution segment from product sales to its customers when (i) title and risk of loss are transferred

generally recognizes revenue in its distribution segment when:

(i) finished goods are shipped to our distribution customers

(in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale,

persuasive evidence of an arrangement exists;

(iii) the Company has no continuing obligations to the customer;

and (iv) collection

of the related accounts receivable is reasonably assured.

The Company defers revenue when it receives consideration before achieving

the criteria previously mentioned.

i.e., transfer of control);

(ii) there are no other deliverables or performance obligations;

and (iii) there are no further

obligations to the customer after the title of the goods has transferred.

When the Company receives consideration before

achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred

income in the accompanying consolidated balance sheets.

Contract liabilities at September 30, 2020 and 2019 were $75,000 and

$0, respectively, for the distribution segment.

Design Segment

Under ASC 606, the

Company applies the “cost to cost”

The Company applies

the “cost to cost”

and “right to invoice”

methods of revenue recognition to the contracts

with customers in the design segment.

methods of revenue recognition to the contracts with customers

in the design segment.

The design segment typically engages in two types of contracts:

(i) Time and Material and

(ii) Fixed Price contracts.

The Company recognizes revenue over time on its time and material contracts utilizing a “right

to invoice”

Revenues from fixed price contracts that require performance of services that are not related to the

production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance

obligations or the “cost to cost”

Revenues from contracts that contain specific deliverables are recognized

when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted.

(i) time and material and (ii) fixed price

The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice”

Revenues from fixed price contracts that require performance of services that are not related to the production of tangible

assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations or the “cost

to cost”

Revenues from contracts that contain specific deliverables are recognized when the performance obligation

has been satisfied or the transfer of goods to the customer has been completed and accepted.

Recognized revenues

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receivable in the accompanying consolidated balance sheets.

Contract assets at September 30, 2019 and 2018 were approximately $0.

Contracts where collections to date have exceeded recognized revenues, or contract liabilities, are recorded as a liability and

classified as a component of deferred income in the accompanying consolidated balance sheets.

Contract liabilities at September

30, 2019 and 2018 were approximately $220,000 and $125,000, respectively.

Contract assets at September 30, 2020 and 2019 were $649,000 and $611,000,

respectively.

Contracts where collections to date have exceeded recognized revenues, or contract liabilities, are recorded as a

liability and classified as a component of deferred income in the accompanying consolidated balance sheets.

Contract liabilities

at September 30, 2020 and 2019 were $410,000 and $220,000, respectively.

Business Combinations

The Company allocates

the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based

on their estimated fair values.

The excess of the purchase consideration over the fair values of these identifiable assets and

liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, the Company makes

significant estimates and assumptions, especially with respect to intangible assets.

The Company recognizes

the purchase of assets and the assumption of liabilities as an asset acquisition, if the transaction does not constitute a business

The excess of the fair value of the purchase price is allocated on a relative fair value basis to the identifiable

assets and liabilities.

No goodwill is recorded in an asset acquisition.

the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their

estimated fair values.

The excess of the purchase consideration over the fair values of these identifiable assets and liabilities

is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, the Company makes significant

estimates and assumptions, especially with respect to intangible assets.

Critical estimates

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but actual results may differ from estimates.

Other estimates associated

with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities

Segment Reporting

As a result of

the acquisition of IPS, management conducts business through two distinct operating segments, which are also our

The Company has two

reportable segments:

distribution and design.

Forward US and Forward Switzerland comprise

the distribution operating segment and IPS is the design operating segment.

It should be noted that financial performance and

results of operations in the design segment for the fiscal year ended September 30, 2018 only covers the period following the

closing of the acquisition of IPS on January 18, 2018 through fiscal year end on September 30, 2018.

The Fiscal 2019 results

presented for the design segment are for the entire fiscal year.

The distribution segment consists of two reporting units (Forward US and Forward

Switzerland, that collectively comprise one operating segment) that source and distribute carrying cases and other accessories

for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic devices.

The design segment

consists of two operating segments (IPS and Kablooe, which have been aggregated into one reportable segment) that provide a full

spectrum of hardware and software product design and engineering services.

Organizing our business

through these operating segments allows us to align our resources and manage our operations.

Our chief operating decision maker

regularly reviews operating segment revenue and profitability when assessing financial results of operating segments and allocating

We measure the performance

of our operating segments based upon operating segment revenue and operating income or loss.

Segment operating income or loss includes

revenues earned and expenses incurred directly by the operating segment, including cost of sales and selling, marketing, and general

and administrative expenses (see Note 16 for more discussion on operating segments).

Goodwill and Intangible Assets

Goodwill was acquired

through the IPS acquisition on January 18, 2018.

The value of goodwill acquired was $2.182 million.

There was no impairment as

of September 30, 2019.

Intangible assets

were acquired through the IPS acquisition on January 18, 2018.

The intangible assets include trademark and customer relationships.

The value at acquisition date of January 18, 2018 was $475,000 for the trademark and $1,050,000 for the customer relationships.

The intangible assets are amortized over the useful life which is 15 years for the trademark and 8 years for the customer relationships.

Amortization of intangibles is recognized in general and administrative expenses within the design segment of operations for the

periods presented.

The net value of the intangible assets was approximately $827,000 and $421,000 as of September 30, 2019 for

the customer relationships and trademark, respectively.

The net value of intangible assets was approximately $958,000 and $453,000

as of September 30, 2018 for the customer relationships and trademark, respectively.

The Company reviews

goodwill for impairment at least annually, or more often if triggering events occur.

The Company has two reporting units with goodwill

and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering

The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to

have occurred.

If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting

unit is less than its carrying amount, then the Company would not need to perform the impairment test for the reporting unit.

the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the Company will compare

the fair value of the reporting unit with its carrying amount, including goodwill.

If the fair value of the reporting unit exceeds

its carrying value, no impairment charge is recognized.

If the fair value of the reporting unit is less than its carrying value,

an impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value.

A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting

unit and the implied fair value of goodwill.

During Fiscal 2020, the Company recorded an impairment charge related to goodwill

(See Note 4).

Recent Accounting Pronouncements

Effective October

1, 2018, the Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers”

606”), using the modified retrospective method.

The adoption had no impact to the Fiscal 2019 results nor was there a cumulative

effect adjustment for previous periods.

The Company has performed a review of ASU 2014-09 as compared to its previous accounting

policies for our products and services revenues and did not identify any material impact to revenue.

See Note 2 of the consolidated

financial statements for more details about the revenue recognition guidelines under ASC 606 adopted in the first quarter of Fiscal

2016, the FASB issued ASU 2016-02, “Leases (Topic 842),”

which will require lessees to report most leases as

assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged.

This ASU requires a

modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year

The new standard is effective for reporting periods beginning after December 15, 2018 and early adoption is

The Company adopted ASU 2016-02 effective October 1, 2019 and upon adoption of Topic 842 the Company expects

recognition of additional assets and corresponding liabilities pertaining to its operating leases on its consolidated balance

The Company expects the adoption will result in an increase in other assets and an increase in other liabilities of

approximately $3.7 million.

The Company does not expect the adoption of the new standard to have a significant impact on its

consolidated statements of operations and cash flows.

In August 2018, the

FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts and Cash Payments,”

providing additional guidance on several cash flow classification issues, with the goal of the update to reduce the current and

potential future diversity in practice.

The amendments in this update are effective for fiscal years beginning after December 15,

2017, and interim periods within those fiscal years.

The Company early adopted ASU No.

2016-15 and the adoption did not have any

impact on the Company’s consolidated financial statements.

the first quarter of 2019, the Company adopted FASB ASU No.

2016-16, “Income Taxes (Topic 740):

Intra-Entity Transfers of

Assets Other Than Inventory”

(“ASU 2016-16”), which requires the recognition of the income tax consequences of

an intra-entity transfer of an asset, other than inventory, when the transfer occurs.

The adoption of ASU 2016-16 did not have

an impact to the financial statements due to the Company’s maintenance of a full valuation allowance on the Company’s

net deferred tax asset.

January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350)—Simplifying the

Test for Goodwill Impairment.”

ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the

requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill

impairment test referenced in ASC 350, “Intangibles - Goodwill and Other (ASC 350).”

result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting

unit with its carrying amount.

An impairment charge should be recognized for the amount by which the carrying amount exceeds

the reporting unit’s fair value.

However, the impairment loss recognized should not exceed the total amount of goodwill

allocated to that reporting unit.

ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019,

including any interim impairment tests within those annual periods, with early application permitted for interim or annual

goodwill impairment tests performed on testing dates after January 1, 2017.

The Company adopted the standard in the first

quarter of Fiscal 2019 and it had no impact on the Company’s consolidated financial statements.

In May 2017, the FASB

issued ASU No.

2017-09, “Scope of Modification Accounting”, to provide guidance on which changes to the terms

or conditions of a share-based payment award require an entity to apply modification accounting.

This ASU is effective for interim

and annual periods beginning after December 15, 2017.

Early adoption is permitted.

of this ASU is prospective.

The Company adopted ASU No.

2017-09 in the first quarter of Fiscal 2019 and the adoption did not have

any impact on the Company’s consolidated financial statements.

In March 2018, the

FASB issued ASU 2018-05, “Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

The ASU adds various Securities and Exchange Commission (“SEC”) paragraphs pursuant to the issuance

of the December 2017 SEC Staff Accounting Bulletin No.

118, “Income Tax Accounting Implications of the Tax Cuts and Jobs

Act (SAB 118)”, which was effective immediately.

The SEC issued SAB 118 to address concerns about reporting entities’

ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period

of enactment.

SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Cuts and

Jobs Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate.

has accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118.

In June 2018, the

FASB issued ASU 2018-07, “Compensation - Stock Compensation.”

ASU 2018-07 is an accounting pronouncement which expands

the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018,

with early adoption permitted.

We are currently in the process of evaluating the effects of this pronouncement on our consolidated

financial statements.

In August 2018, the

FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820).”

The updated guidance improves

the disclosure requirements on fair value measurements.

The updated guidance if effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2019.

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13 “Fair

Value Measurement –

Disclosure Framework (Topic 820)”

to improve the disclosure requirements on fair value measurements.

The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,

Early adoption is permitted for any removed or modified disclosures.

The Company is currently assessing the timing and impact of adopting the updated provisions.

The Company does not expect the adoption of this guidance

to have a material impact on its consolidated financial statements.

In November 2019,

the FASB issued ASU 2019-08, “Compensation –

Stock Compensation (Topic 718) and Revenue from Contracts with Customers

(Topic 606).”

ASU 2019-08 is an accounting pronouncement which expands the scope of ASC Topic 718 to provide guidance for

share-based payment awards granted to a customer in conjunction with selling goods or services accounted for under Topic 606.

pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

Company is currently evaluating the effects of this pronouncement on our consolidated financial statements along with the effects

of ASU 2018-07 noted above.

the FASB issued ASU 2019-08, “Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic

to provide guidance for share-based payment awards granted to a customer in conjunction with selling goods or services

accounted for under Topic 606.

The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods

within those fiscal years.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated

financial statements.

In November 2019,

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Credit Losses.”

ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.”

The ASU 2019-11 amendment provides clarity and improves the codification

to ASU 2016-03.

The pronouncement would be effective concurrently with the adoption of ASU 2016-03.

The adoption of ASU 2016-03

and ASU 2019-11, similarly, did not impact the consolidated financial statements.

ASU 2019-11 is an accounting pronouncement that provides clarity to and amends earlier guidance on this topic and would be effective

concurrently with the adoption of such earlier guidance.

This pronouncement is effective for the Company for fiscal years beginning

after December 15, 2022 and interim periods within those fiscal years.

The Company is currently evaluating the effects of this

pronouncement on its consolidated financial statements.

August 2018, the FASB issued ASU 2018-15 “

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350-40)”

addressing customers’

accounting for implementation costs incurred

in a cloud computing arrangement that is a service contract, which requires customers to apply internal-use software guidance

to determine the implementation costs that are able to be capitalized.

Capitalized implementation costs are required to be

amortized over the term of the arrangement, beginning when the cloud computing arrangement is ready for its intended

The effective date of the new guidance for public companies is for fiscal years beginning after December 15,

2019 and interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect the

adoption of this guidance to have a material impact on its consolidated financial statements.

2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.”

guidance removes certain exceptions to the general principles in Topic 740 and provides consistent application of

GAAP by clarifying and amending existing guidance.

The effective date of the new guidance for public companies is for

fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

Early adoption is

The Company is currently evaluating the timing of adoption and impact of the updated guidance on its consolidated

financial statements.

RESULTS OF OPERATIONS FOR FISCAL 2020

COMPARED TO FISCAL 2019

Net Income (Loss)

Distribution Segment

Distribution segment

net loss was approximately $1.8 million in Fiscal 2019 compared to $1.3 million net income in Fiscal 2018.

Net loss in Fiscal

2019 was primarily due to a decline in sales volume and associated gross profit in addition to an increase in operating expenses

including approximately $159,000 in bad debt expense, approximately $350,000 increase in legal expenses related to the SEC investigation,

and approximately $110,000 for share-based compensation expense related to the vesting of shares for directors among other less

significant rises in operating expenses in Fiscal 2019.

In addition, other expense of $296,000 in a non-cash fair value adjustment

was recorded in the fourth quarter to adjust for the earn-out and deferred cash consideration components for the acquisition of

Whereas, in Fiscal 2018, the Company booked a positive fair value adjustment of $498,000 to the earn-out and deferred cash

consideration and an income tax benefit of $747,000 resulting from the acquisition of IPS.

net loss was $1,321,000 in Fiscal 2020 compared to $1,811,000 in Fiscal 2019.

The decrease in net loss in Fiscal 2020 was due to

an increase in other income related to fair value adjustments (non-cash income), a decrease in general and administrative expenses,

partially offset by lower revenue and gross profit.

Design Segment

The comparative financial

results presented for the design segment for Fiscal 2018 represents less than a full year of operations and should not be directly

compared to Fiscal 2019 as an accurate measurement of performance.

Net loss for the design segment was approximately $1.8 million

for Fiscal 2019.

Net loss in Fiscal 2019 Period was primarily due to project overruns and an increase in the bad debt provision.

For the shortened Fiscal 2018, the design segment net income was approximately $66,000.

Net loss for the design

segment was $364,000 in Fiscal 2020 as compared to $1,793,000 in Fiscal 2019.

The decrease in net loss in Fiscal 2020 resulted

from higher gross profit, lower general and administrative expenses, partially offset by the impairment of goodwill (non-cash expense).

Main components of

Net income (loss) for the Distribution and Design Segments are reflected in the table below:

Main Components of Net Income

net loss for the distribution and design segments are reflected in the table below:

Components of Net Income

(amounts in thousands)

Increase (Decrease)

Sales and marketing expenses

General and administrative expenses

Operating income (loss)

Other expense (income), net

Income tax benefit

Net income (loss)

Net income (loss) per basic and diluted

share was $(0.38) for Fiscal 2019 and $0.15 for Fiscal 2018.

General and administrative

Goodwill impairment

Operating loss

Other (income)/expense, net

tax provision/(benefit)

Consolidated basic and diluted income loss

per share was $0.19 and $0.38 for Fiscal 2020 Fiscal 2019, respectively.

We generate revenue

through two operating segments.

The design segment revenues presented for Fiscal 2019 is for an entire fiscal year and the design

segment revenues for Fiscal 2018 is for the shortened year from acquisition date of January 18, 2018 through September 30, 2018.

We believe that our total revenue will increase in the future as we continue to integrate IPS business with Forward’s historical

Due to the long-term nature of our customer projects, we anticipate the growth will take some time to materialize.

are currently working on integrating the sales forces for both the distribution and design segments of our business to explore

harmonious opportunities.

through two reportable segments:

distribution and design.

We believe that our total revenue will increase in the future as we grow

our retail business and integrate the Kablooe business.

We continue to work on integrating the sales forces for both the distribution

and design segments of our business to explore synergistic opportunities.

The chart below indicates

the revenues by operating segment for the years ended September 30, 2019 and 2018:

the revenues by operating segment for Fiscal 2020 and Fiscal 2019:

(amounts in thousands)

For the Fiscal Years Ended

September 30,

Increase (Decrease)

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Net revenues in the

distribution segment declined approximately $2.4 million, or 10%, to approximately $22.0 million in Fiscal 2019 from $24.4 million

in Fiscal 2018 due to reduced revenues in both Diabetic Products and Other Products.

Revenues from Diabetic Products declined approximately

$2.0 million and revenues from Other Products declined approximately $0.4 million.

distribution segment declined $1,236,000, or 5.6%, to $20,752,000 in Fiscal 2020 from $21,988,000 in Fiscal 2019 due to reduced

revenues in the sale of diabetic products partially offset by an increase in other product revenue.

Revenues from diabetic products

declined $2,314,000 and revenues from other products increased $1,078,000.

We believe this decrease in diabetic product sales and

increase in other product sales is a trend that will continue.

The following tables

set forth revenues by channel, product line and geographic location of our distribution segment customers for the periods indicated:

Net Revenues for Fiscal Year Ended September 30, 2019

Net Revenues for Fiscal 2020

(amounts in thousands)

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Total net revenues

Net Revenues for Fiscal Year Ended September 30, 2018

Net Revenues for Fiscal 2019

(amounts in thousands)

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Diabetic Product Revenues

Forward’s distribution

segment sources to the order of, and sells carrying cases for blood glucose diagnostic kits directly to, OEMs (or their contract

manufacturers).

The OEM customer or its contract manufacturer packages our carry cases “in box”

as a custom accessory

for the OEM’s blood glucose testing and monitoring kits, or to a lesser extent, sell them through their retail distribution

Our distribution segment sources to the

order of, and sells carrying cases for, blood glucose diagnostic kits directly to OEMs (or their contract manufacturers).

customer or its contract manufacturer packages our carry cases “in box”

as a custom accessory for the OEM’s blood

glucose testing and monitoring kits, or to a lesser extent, sell them through their retail distribution channels.

Revenues from diabetic

Products declined $2.0 million to $19.6 million in Fiscal 2019 from $21.6 million in Fiscal 2018.

The decline was primarily due

to lower revenues from all of our major Diabetic Products customers as a result of declining customer demand.

Revenues from our

other Diabetic Products customers declined, as well.

The following table sets forth our Diabetic

Product revenue from major customers for the periods indicated:

products declined $2,314,000, or 11.8%, to $17,237,000 in Fiscal 2020 from $19,551,000 in Fiscal 2019.

The decline was primarily

due to lower revenues from two major diabetic customers (Diabetic Products Customers B and C).

Revenue declines from other major

diabetic customers were less significant and were partially offset by an increase in revenue from all of our other diabetic products

As mentioned above, management believes that revenues from diabetic customers will continue to decline.

The following table sets forth our distribution

segment net revenues by diabetic products customer for the periods indicated:

(amounts in thousands)

For the Fiscal Years Ended

September 30,

Increase (Decrease)

Diabetic Products Customer A

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Total Diabetic Revenue

Revenues from Diabetic Products customers

represented 89% of our net revenues for the distribution segment in both Fiscal 2019 and Fiscal 2018.

Revenues from diabetic products represented

83% of net revenues for the distribution segment in Fiscal 2020 compared to 89% in Fiscal 2019.

Other Product Revenues

The distribution segment

also sources and sells cases and protective solutions to OEMs for a diverse array of portable electronic devices (such as bar code

scanners, GPS devices, cellular phones, tablets and cameras), as well as a variety of other products (such as sporting and recreational

products and firearms) on a made-to-order basis that are customized to fit the products sold by our OEM customers.

Our distribution segment

also sources and sells cases and protective solutions to OEMs for a diverse array of portable electronic and non-electronic products

(such as sporting and recreational products, bar code scanners, GPS devices, tablets and firearms) on a made-to-order basis that

are customized to fit the products sold by our OEM customers.

In Fiscal 2020, other product revenues were also derived from the

sales and sourcing of personal protective equipment.

Revenues from other

Products declined approximately $0.4 million to $2.4 million in Fiscal 2019 from $2.8 million in Fiscal 2018.

This is primarily

due to the net decline of $0.7 million from existing customers, partially offset by increases of approximately $0.3 million from

new customers.

We will continue to focus on our sales and sales support teams in our attempt to expand and diversify our Other

Products customer base.

products increased $1,078,000, or 44%, to $3,515,000 in Fiscal 2020 from $2,437,000 in Fiscal 2019.

Revenues from the sale of personal

protective equipment increased $758,000 and sales from other products increased $320,000.

We will continue to focus on our sales

and sales support teams in our attempt to expand and diversify our other products customer base.

Revenues of other

Products represented 11% of our net revenues in both Fiscal 2019 and Fiscal 2018.

products represented 17% of our net revenues in Fiscal 2020 as compared to 11% in Fiscal 2019.

Design Segment

Net revenues in the

design segment were approximately $15.4 million for Fiscal 2019.

Net revenues were $10.2 million for the shortened Fiscal 2018

Net revenues increased in Fiscal 2019 due to the impact of a new project from a major customer (see chart below).

The following table

sets forth our design segment net revenues by major customers for Fiscal 2019 and the shortened Fiscal 2018 period:

Net revenues in

the design segment declined $1,695,000, or 11.0%, to $13,726,000 in Fiscal 2020 from $15,421,000 in Fiscal 2019.

in revenues was due to the reduction or delay in demand for design and development projects, partially related to COVID-19.

Since its acquisition on August 17, 2020, Kablooe generated revenue of $172,000 in Fiscal 2020.

The following table sets

forth our design segment net revenues by major customers for the periods indicated:

(amounts in thousands)

For the Fiscal Years Ended

September 30,

Design Segment Customer A

Design Segment Customer C

Design Segment Customer B

Design Segment Customer D

Increase (Decrease)

Design Segment Customer 1

Design Segment Customer 2

Design Segment Customer 3

Design Segment Customer 4

Design Segment Customer 7

All other Design Segment Customers

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Gross profit for the

distribution segment declined approximately $0.7 million, or 17%, to $3.4 million in Fiscal 2019 from $4.1 million in Fiscal 2018.

As a percentage of revenues, our gross margin declined to 15.3% in Fiscal 2019, compared to 16.7% in Fiscal 2018.

The gross profit decline

was driven primarily by a year over year decrease in total sales volumes in addition to margin decline.

Fiscal 2019 revenues in

the Americas region declined approximately 12% to $6.3 million primarily due to decreased revenues from Diabetic Products Customers

B and D, partially offset by increased revenues from Diabetic Products Customers A and C.

Fiscal 2019 revenues in the APAC region

declined approximately 1% to $7.8 million primarily due to decreased revenues from Diabetic Products Customer C, partially offset

by an increase in revenue from Diabetic Customers B and D in that region.

Fiscal 2019 revenues in the EMEA region declined approximately

16% to $7.7 million primarily due to decreased revenues from Diabetic Products Customers B, D and A in addition to a net decline

in revenues from Other Products customers in that region.

distribution segment declined $600,000, or 17.8%, to $2,775,000 in Fiscal 2020 from $3,375,000 in Fiscal 2019.

Gross margin declined

to 13.4% in Fiscal 2020, compared to 15.3% in Fiscal 2019.

These declines were

driven primarily by lower sales revenue and a shift to lower-margin cases and pricing pressures on diabetic products from customers.

The decline in gross margin from our diabetic products was partially offset by higher gross margins on the sale of personal protective

equipment in Fiscal 2020.

We are working on expanding our product offering to include higher margin products as well as enhancing

our sales efforts to raise top side gross sales to raise total gross profit.

Design Segment

Gross profit for the

design segment was approximately $3.2 million for Fiscal 2019.

Gross Profit for the design segment was approximately $2.5 million

for the shortened Fiscal 2018 period.

Gross Profit as a percentage of revenue was 20.8% for the design segment in Fiscal 2019 compared

to 24.7% in Fiscal 2018.

The decline in gross profit as a percentage of revenue was primarily due to project overruns for two significant

customers in the first half of Fiscal 2019.

We believe the shortfall for the two customers is not an ongoing issue as the projects

had been completed in the second quarter of Fiscal 2019.

Depreciation expense is allocated to Cost of Sales in the design segment.

Depreciation expense was approximately $139,000 and $94,000 for Fiscal 2019 and Fiscal 2018, respectively.

design segment increased $658,000, or 20.5%, to $3,864,000 in Fiscal 2020 from $3,206,000 in Fiscal 2019.

Gross margin improved

from 20.8% Fiscal 2019 to 28.2% in Fiscal 2020.

Gross margin in Fiscal 2019 was significantly lower than historical performance

due to project overruns for two significant customers in that year.

Depreciation expense, which is allocated to cost of sales for

the design segment, was $98,000 and $139,000 for Fiscal 2020 and Fiscal 2019, respectively.

Sales and Marketing Expenses

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Sales and marketing

expenses for the distribution segment increased approximately $145,000, or 11%, to approximately $1.4 million in Fiscal 2019 from

approximately $1.3 million in Fiscal 2018.

The increase was primarily due to additional expenses related to our strategic collaboration

and distribution agreement with Mooni AB International.

As a result of this collaboration and other product initiatives, the Company

began to invest in and build out a distribution network for retail.

The distribution network will be responsible for getting products

into big box retailers for retail consumption.

Fluctuations in other components of “Sales and Marketing Expenses”

not material individually or in the aggregate.

expenses for the distribution segment increased $54,000, or 3.7%, to $1,495,000 in Fiscal 2020 from $1,441,000 in Fiscal 2019.

The increase was primarily due to additional amortization on the cost of the Mooni Agreement (see Note 19).

Sales and marketing

expenses for the distribution segment increased to 7.2% of revenues in Fiscal 2020 from 6.6% in Fiscal 2019.

Design Segment

Sales and marketing

expenses for the design segment, consisting primarily of sales personnel salaries and commissions, were approximately $524,000

for Fiscal 2019.

Sales and marketing expenses were approximately $486,000 for the shortened year from January 19, 2018 to September

Sales and marketing expenses in the design segment declined in the 2019 Period from the 2018 Period on a ratable basis

as a result of a reduction in salesperson headcount.

expenses for the design segment decreased $68,000, or 13.0%, to $456,000 in Fiscal 2020 from $524,000 in Fiscal 2019.

was primarily due to lower sales commissions and entertainment related expenses, partially offset by higher sales salaries.

and marketing expenses for the design segment remained fairly consistent at 3.3% of revenues in Fiscal 2020 compared to 3.4% in

General and Administrative Expenses

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General and administrative

expenses for the distribution segment increased approximately $710,000, or 27%, to approximately $3.3 million in Fiscal 2019 from

approximately $2.6 million in Fiscal 2018, primarily due to an increase in legal fees of approximately $350,000 related to the

SEC investigation, an increase in bad debt expense of approximately $159,000, an increase in personnel costs of approximately $155,000

relating to the addition of a COO, an increase of consulting and professional fees of approximately $50,000 related to the migration

to a new computing software platform and an increase of approximately $80,000 in non-income state business taxes, partially offset

by a reduction of legal, accounting and valuation fees of $130,000 related to the acquisition of IPS in the 2018 Period.

legal fees incurred as a result of the SEC investigation are covered by an insurance policy with a $100,000 deductible.

in other components of “General and Administrative Expenses”

were not material individually or in the aggregate.

expenses for the distribution segment declined $427,000, or 12.9%, to $2,884,000 in Fiscal 2020 from $3,311,000 in Fiscal 2019.

This decline was primarily due to a $511,000 reduction in legal fees related to responding to an SEC subpoena in Fiscal 2019 (which

includes an $80,000 insurance settlement received in Fiscal 2020), a decrease in bad debt expense of $69,000, partially offset

by higher professional fees of $100,000 (related to the Kablooe acquisition, valuation work and other matters), severance costs

of $157,000 and $65,000 related to internal software implementation projects.

General and administrative expenses as a percentage

of revenue for the distribution segment decreased to 13.9% in Fiscal 2020 from 15.1% in Fiscal 2019.

Design Segment

General and administrative

expenses for the design segment were approximately $4.4 million for Fiscal 2019.

General and administrative expenses for the design

segment were approximately $1.9 million for the shortened year from January 19, 2018 to September 30, 2018.

Bad debt expense was

approximately $1.9 million for Fiscal 2019 and approximately $126,000 for the shortened Fiscal 2018 period.

Bad Debt expense increased

primarily as a result of a full provision on outstanding receivables for a major design customer of approximately $1.6 million.

expenses for the design segment decreased $1,631,000, or 37.1%, to $2,771,000 in Fiscal 2020 from $4,402,000 for Fiscal 2019.

decrease is primarily related to a $2,075,000 reduction in bad debt expense, partially offset by the $327,000 investment impairment

discussed in Note 6.

Amortization of intangible assets is allocated to general and administrative expenses in the design segment.

Amortization of intangible

assets was approximately $162,000 and $114,000 for Fiscal 2019 and the shortened year Fiscal 2018, respectively.

Amortization of intangible assets was $167,000 and $163,000 for Fiscal 2020 and Fiscal 2019, respectively.

Other (Income)/Expense

Distribution Segment

Other income (expense),

net, for the distribution segment was approximately $438,000 of expense in Fiscal 2019 compared to approximately $402,000 of income

for Fiscal 2018.

The decrease to other income (expense) is primarily due to the net fair value increase adjustment of $296,000

recognized in the fourth quarter of Fiscal 2019 compared to the $498,000 net fair value decrease adjustment recognized in the

third quarter of Fiscal 2018 and approximately $43,000 of additional interest expense in Fiscal 2019.

Fluctuations in other components

of “Other Income (Expense)”

were not material individually or in the aggregate.

The distribution segment

reported other income of $202,000 in Fiscal 2020 as compared to other expense of $438,000 in Fiscal 2019.

The variance is due to

fair value adjustments of $334,000 in Fiscal 2020 to reduce the deferred consideration liability associated with the IPS acquisition

as compared to fair value adjustments of $296,000 in Fiscal 2019 to increase this deferred consideration liability.

Design Segment

Other income (expense),

net, for the design segment was approximately $73,000 of expense composed primarily of net interest expense for Fiscal 2019.

income (expense), net was approximately $30,000 for the shortened year Fiscal 2018.

he Company recorded

an income tax refund of approximately $4,000 for the fiscal year ended September 30, 2019.

The Company generated a loss before

taxes of approximately $3.6 million.

The Company maintains significant net operating loss carryforwards and does not recognize

a significant income tax expense (benefit) as the Company's deferred tax provision is typically offset by maintaining a full valuation

allowance on the Company's net deferred tax asset.

The Company recorded

an income tax benefit of approximately $747,000 for the fiscal year ended September 30, 2018 in connection with the acquisition

of IPS in January 2018.

The Company generated income before taxes of approximately $632,000 in Fiscal 2018.

The effective tax rate

for Fiscal 2018 was approximately -118%.

The effective tax rate differs from the statutory tax rate of 24% (34% for the first three

months in Fiscal 2018 and 21% for the last nine months of Fiscal 2018) primarily due to a reduction in the valuation allowance

as a result of the Company’s deferred tax liability created upon the acquisition of IPS.

The design segment

reported other income of $14,000 in Fiscal 2020 as compared to other expense of $73,000 in Fiscal 2019.

The change relates to interest

payments of $61,000 received on the note receivable written off in Fiscal 2019 (See Note 6).

In addition, interest expense was

lower in Fiscal 2020 due to lower interest rates and a reduction in the average amount of debt outstanding.

In Fiscal 2020, the

Company recorded a tax provision of $9,000, generated a loss before income taxes of $1,766,000 and had an effective tax rate of

In Fiscal 2019, the Company recorded a tax benefit of $4,000, generated a loss before income taxes of $3,604,000 and had

an effective tax rate of 0.1%.

The Company maintains

significant net operating loss carryforwards and does not recognize a significant income tax provision/(benefit) as its deferred

tax provision is typically offset by maintaining a full valuation allowance on its net deferred tax assets.

The Fiscal 2020 tax

provision is primarily comprised of income taxes assessed in states where net operating losses are not available.

LIQUIDITY AND CAPITAL RESOURCES

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As of the filing date

of this report, we had $0 available under our $1.3 million Line of Credit.

The Company intends on paying down the Line of Credit

as funds become available when Accounts Receivable turn over in the short-term.

Additionally, Forward China holds a $1.6 million

promissory note which was extended to January 17, 2020 (see Note 13 –

Related Party Transactions).

Although this note has

been extended on multiple occasions to assist the Company with its liquidity position, we plan on funding the repayment at maturity

using existing cash balances and/or obtaining an additional credit facility.

of this report, we had $300,000 available under our $1,300,000 line of credit which matures May 31, 2021.

Additionally, Forward

China holds a $1,600,000 promissory note which was extended to December 31, 2021 (see Note 14).

Although this note has been extended

on multiple occasions to assist the Company with its liquidity position, we plan on funding the repayment at maturity using existing

cash balances and/or obtaining an additional credit facility as deemed necessary.

We can provide no assurance that Forward China

will extend the note again if we request an extension nor that any such credit facility will be available on terms acceptable to

us or at all.

As discussed in Note

18, on April 18, 2020, the Company entered into a loan in an aggregate principal amount of $1,357,000 under the Paycheck Protection

Program (the “PPP Loan”) pursuant to the recently enacted U.S.

Coronavirus Aid, Relief, and Economic Security Act (the

“CARES Act”).

In December 2020, the Small Business Administration approved our forgiveness request for this loan.

We anticipate that

our liquidity and financial resources for Forward and the consolidated subsidiaries for the next 12 months from the date of the

filing of this report will be adequate to manage our operating and financial requirements.

If we have the opportunity to make a

strategic acquisition or to make an investment in a product or partnership, we will require additional capital beyond our current

cash balance to fund the opportunity.

If we seek to raise additional capital, there is no assurance that we will be able to raise

funds on terms that are acceptable to us or at all.

At September 30,

2019, our current ratio (current assets divided by current liabilities) was 1.4 compared to 2.0 at September 30, 2018;

ratio (current assets less inventories divided by current liabilities) was 1.2 compared to 1.8 at September 30, 2018;

working capital (current assets less current liabilities) was approximately $3.5 million compared to approximately $7.6 million

our liquidity and financial resources for the next 12 months from the date of the filing of this report will be adequate to manage

our operating and financial requirements.

If we have the opportunity to make a strategic acquisition (as we have in the past with

the acquisitions of IPS and Kablooe) or an investment in a product or partnership, we may require additional capital beyond our

current cash balance to fund the opportunity.

If we seek to raise additional capital, there is no assurance that we will be able

to raise funds on terms that are acceptable to us or at all.

At September 30, 2020,

As of December 13, 2019, we had approximately $2.3 million of cash on hand.

our working capital (current assets less current liabilities) was $3,396,000 compared to $3,542,000 at September 30, 2019.

November 30, 2020, we had $2,594,000 of cash on hand.

Although we do not

anticipate the need to purchase any additional material capital assets in order to carry out our business, it may be necessary

for us to purchase equipment and other capital assets in the future, depending on demand.

During the fiscal

years ended September 30, 2019 and 2018, our sources and uses of cash were as follows:

for us to purchase equipment and other capital assets in the future, depending on need.

During Fiscal 2020

and Fiscal 2019, our sources and uses of cash were as follows:

Cash Flows from Operating Activities

During Fiscal 2020,

cash used in operating activities of approximately $1,970,000 resulted from a net loss of approximately $3,604,000, a reduction

of accounts payable (including due to Forward China) of approximately $975,000, a net loss reconciling adjustment of approximately

$327,000 for the fair value of cost method investment for services provided, an increase in prepaid expenses and other current

assets of approximately $193,000, an increase in other assets of approximately $191,000 and an increase in inventory of approximately

$40,000, partially offset by the reduction of accounts receivable of approximately $264,000, an increase in accrued expenses and

other current liabilities of approximately $97,000, an increase in deferred income of approximately $95,000, and the add-back

of non-cash items including bad debt expense of approximately $2,065,000, depreciation and amortization of approximately $312,000,

share-based compensation expense of approximately $216,000, deferred rent amortization of approximately $16,000 and a non-cash

increase of $296,000 in fair value adjustments of the earn-out consideration and deferred cash consideration.

cash used in operating activities of $263,000 resulted from a net loss of $1,775,000, an increase in accounts receivable of $733,000,

non-cash fair value adjustments of $334,000, and bad debt recoveries of $78,000, partially offset by non-cash impairment charges

of $1,342,000, depreciation and amortization of $272,000, share-based compensation of $245,000 and the net change in other operating

assets and liabilities of $798,000.

During Fiscal 2019,

cash provided by operating activities of approximately $956,000 resulted from a net income of approximately $1,379,000, a reduction

in inventory of approximately $552,000, an increase in accounts payable (including due to Forward China) of approximately $575,000

and a reduction in prepaid expenses of approximately $106,000, partially offset by an increase in accounts receivable of approximately

$588,000, a decrease in deferred income of approximately $312,000, a reduction in accrued expenses of approximately $169,000, and

the add back of non-cash items including share-based compensation of approximately $290,000, depreciation and amortization of approximately

$228,000, bad debt expense of approximately $126,000, deferred rent amortization of approximately $13,000 and a non-cash reduction

of deferred tax asset valuation of $747,000 and a non-cash reduction of approximately $498,000 in fair value adjustments of the

earn-out consideration and deferred cash consideration.

cash used in operating activities of $1,970,000 resulted from a net loss of $3,604,000, a reduction of accounts payable (including

due to Forward China) of $975,000, a net loss reconciling adjustment of $327,000 for the fair value of cost method investment for

services provided, an increase in prepaid expenses and other current assets of $193,000, an increase in other assets of $191,000

and an increase in inventory of $40,000, partially offset by the reduction of accounts receivable of $264,000, an increase in accrued

expenses and other current liabilities of $97,000, an increase in deferred income of $95,000, and the add-back of non-cash items

including bad debt expense of $2,065,000, depreciation and amortization of $312,000, share-based compensation expense of $216,000,

deferred rent amortization of $16,000 and a non-cash increase of $296,000 in fair value adjustments of the earn-out consideration

and deferred cash consideration.

Cash Flows from Investing Activities

In Fiscal 2020, cash

used for investing activities of approximately $33,000 resulted from purchases of capital assets.

used for investing activities of $390,000 primarily resulted from the $353,000 cash consideration paid for the Kablooe acquisition

and purchases of property and equipment of $68,000.

In Fiscal 2019, cash

used for investing activities of approximately $1,385,000 resulted primarily from the cash consideration of $1.93 million paid

for the IPS acquisition and purchases of capital assets of approximately $56,000, partially offset by the cash acquired in the

IPS acquisition of approximately $600,000.

used for investing activities of $33,000 resulted from purchases of property and equipment.

Cash Flows from Financing Activities

In Fiscal 2020, cash

provided by financing activities of approximately $726,000 consisted of $1,550,000 in borrowings on the Line of Credit, offset

by $600,000 in repayments on the Line of Credit, approximately $170,000 in repayments on notes payable and approximately $55,000

in repayments on capital equipment leases.

provided by financing activities of $485,000 consisted of $1,357,000 proceeds from the PPP Loan, borrowings of $900,000 under our

line of credit and $32,000 in proceeds from stock options exercised, partially offset by $1,200,000 in repayments on the line of

credit, $500,000 paid out on the deferred cash consideration and $104,000 in repayments on notes payable and capital leases.

In Fiscal 2019, cash

provided by financing activities of approximately $176,000 consisted of $1,600,000 borrowed from Forward China to facilitate the

IPS acquisition and $900,000 in borrowings on the Line of Credit, offset by $1.5 million in repayments on the Line of Credit, a

$500,000 payment for deferred cash consideration of IPS purchase, approximately $298,000 in repayments on notes payable and approximately

$26,000 in repayments on capital equipment leases.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

provided by financing activities of $726,000 consisted of $1,550,000 in borrowings on the line of credit, offset by $600,000 in

repayments on the line of credit and $225,000 in repayments on notes payable and capital leases.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial

statements and notes thereto included in this Annual Report may be found beginning on page F-1 of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity