What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-12-16 compared with 2020-12-17 · 18 added, 513 removed, 4 unchanged (99% of the section changed)

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

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

Market for Common Stock

The principal market

for our common stock is Nasdaq.

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

On November 30, 2020,

the closing price for our common stock was $1.83.

The principal market for

our common stock is Nasdaq.

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

On December 10, 2021, the

closing price for our common stock was $1.81.

Holders of Common Stock

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.

We have not paid any

cash dividends on our common stock since 1987 and do not plan to pay cash dividends in the foreseeable future.

The payment of dividends

in the future, if any, will depend upon our results of operations, as well as our short-term and long-term cash availability, net

working capital, working capital needs, and other factors, as determined by our Board of Directors.

Currently, except as may be

provided by applicable laws, there are no contractual or other restrictions on our ability to pay dividends if we were to decide

to declare and pay them.

At November 30, 2021, there

were approximately 70 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.

We have not paid any cash

dividends on our common stock since 1987 and do not plan to pay cash dividends in the foreseeable future.

The payment of dividends in

the future, if any, will depend upon our results of operations, as well as our short-term and long-term cash availability, net working

capital, working capital needs, and other factors, as determined by our Board of Directors.

Currently, except as may be provided by applicable

laws, there are no contractual or other restrictions on our ability to pay dividends if we were to decide to declare and pay them.

Recent Sales of Unregistered Securities

FINANCIAL DATA

Not applicable.

MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in

this report on Form 10-K.

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

This report includes

“forward-looking statements”, as such term is used within the meaning of the Private Securities Litigation Reform Act

These statements include, among other things, statements regarding:

Expectations regarding having our products in retail outlets;

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

as well as other statements regarding our

future operations, financial condition and prospects, and business strategies.

Forward-looking statements generally can be identified

by words such as "anticipates,"

"believes,"

"estimates,"

"expects,"

"intends,"

"plans,"

"predicts,"

"projects,"

"will be,"

"will continue,"

"will likely

result,"

and similar expressions.

These forward-looking statements are based on current expectations and assumptions that

are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected

in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to,

those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption "Risk Factors"

in Item 1A of this report and those discussed in other documents we file with the SEC.

We undertake no obligation to revise or

publicly release the results of any revision to these forward-looking statements, except as required by law.

Given these risks

and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Business Overview

Forward Industries,

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

Because a high percentage

of our revenues is highly concentrated in a few large customers, and because the volumes of these customers’

to us are highly variable, with short lead times, our quarterly revenues, and consequently our results of operations, are susceptible

to significant variability over a relatively short period of time.

Critical Accounting Policies and Estimates

We have identified

the accounting policies and significant estimation processes below as critical to our business operations and the understanding

of our results of operations.

The discussion below is not intended to be comprehensive.

In many cases, the accounting treatment

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

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.

Revenue Recognition

Distribution Segment

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,

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

The Company applies

the “cost to cost”

and “right to invoice”

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

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

that will not be billed until a later date, or contract assets, are recorded as an asset and classified as a component of accounts

receivable in the accompanying consolidated balance sheets.

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 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

in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and

developed technology, discount rates and terminal values.

Our estimate of fair value is based upon assumptions believed to be reasonable,

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

The Company has two

reportable segments:

distribution and design.

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

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

In August 2018, the

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 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

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,

the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments –

Credit Losses.”

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

Distribution Segment

Distribution segment

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

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

Components of Net Income

(amounts in thousands)

Sales and marketing expenses

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 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 Fiscal 2020 and Fiscal 2019:

(amounts in thousands)

Increase (Decrease)

Distribution Segment

Net revenues in the

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 2020

(amounts in thousands)

Diabetic products

Other products

Total net revenues

Net Revenues for Fiscal 2019

(amounts in thousands)

Diabetic products

Other products

Total net revenues

Diabetic Product Revenues

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 $2,314,000, 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)

Increase (Decrease)

Diabetic Products Customer A

Diabetic Products Customer B

Diabetic Products Customer C

Diabetic Products Customer D

All other Diabetic Products Customers

Total Diabetic Revenue

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

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

Design Segment

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)

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

Total net revenues

Distribution Segment

Gross profit for the

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 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

Distribution Segment

Sales and marketing

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 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

Distribution Segment

General and administrative

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 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 $167,000 and $163,000 for Fiscal 2020 and Fiscal 2019, respectively.

Other (Income)/Expense

Distribution Segment

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

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

Our primary source

of liquidity is our operations.

The primary demand on our working capital has historically been (i) operating losses, (ii) repayment

of debt obligations, and (iii) any increases in accounts receivable and inventories arising in the ordinary course of business.

Historically, our sources of liquidity have been adequate to satisfy working capital requirements arising in the ordinary course

As of the filing date

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 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,

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 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 $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 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 $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 $33,000 resulted from purchases of property and equipment.

Cash Flows from Financing Activities

In Fiscal 2020, cash

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 $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

SELECTED FINANCIAL

Not applicable.

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.

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