What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-27 compared with 2023-12-21 · 207 added, 163 removed, 230 unchanged (62% of the section changed)

15 unchanged sentences

These statements include,

among other things, statements regarding our liquidity, plans on repaying outstanding debt obligations, expectations regarding the effect

of the pandemic and inflation on our 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.

among other things, statements regarding our liquidity, plans on repaying outstanding debt obligations, 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

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.

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

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“in box” together with their branded product offerings or sell them through their retail distribution channels.

Considering the recurring losses incurred by the

retail segment, in July 2023, the Company decided to cease operations of our retail distribution segment and we are presenting the results

of operations for this segment within discontinued operations in the current and prior periods presented herein.

The discontinuation of

the retail segment represents a strategic shift in the Company’s business.

The primary assets of the retail segment are inventory

and accounts receivable.

The Company expects to sell, liquidate, or otherwise dispose of remaining retail inventory by June 30, 2024,

and to collect remaining retail accounts receivable by the end of Fiscal 2024.

After this time, we expect to have no further significant

continuing involvement with the retail distribution segment.

The inventory of the retail segment is presented as discontinued assets held

for sale on the balance sheets at September 30, 2023 and 2022 and the results of operations for the retail segment have been classified

Company does not manufacture any of its OEM products and sources substantially all of these products from independent suppliers in China,

through Forward Industries Asia-Pacific Corporation, a British Virgin Islands corporation (“Forward China”).

Forward China

is owned by our Chairman of the Board and Chief Executive Officer.

In June 2024, the Company’s

stockholders authorized, and the Company’s Board of Directors approved, a 1-for-10 reverse stock split of our common stock, which became

effective on June 18, 2024.

Accordingly, all references made to share, per share, or common share amounts in the accompanying consolidated

financial statements and applicable disclosures have been retroactively adjusted to reflect the reverse stock split.

Considering the recurring

losses incurred by the retail segment, in July 2023, the Company decided to cease operations of our retail distribution segment, and we

are presenting the results of operations for this segment within discontinued operations in the current and prior periods presented herein.

The discontinuation of the retail segment represents a strategic shift in the Company’s business.

The primary assets of the retail

segment are inventory and accounts receivable.

The Company sold, liquidated, or otherwise disposed of the remaining retail inventory and

collected the remaining retail accounts receivable as of September 30, 2024.

As of September 30, 2024, the retail segment was fully discontinued,

and we expect to have no further significant involvement in this segment.

The inventory of the retail segment is presented as discontinued

assets held for sale on the balance sheet at September 30, 2023 and the results of operations for the retail segment have been classified

as discontinued operations on the consolidated statements of operations for the years ended September 30, 2024 and 2023.

All information

and results in this annual report on Form 10-K exclude the discontinued operations unless otherwise noted.

and results in this annual report on Form 10-K exclude the discontinued retail segment unless otherwise noted.

See Note 3 to our consolidated

financial statements for additional information on discontinued operations.

On May 11, 2023, the U.S.

Department of Health and Human Services declared the end of the Public Health Emergency for COVID-19;

however, the effects of COVID-19

continue to linger throughout the global economy and our businesses.

Though the severity of COVID-19 has subsided, new variants, or the

outbreak of a new pathogen, could interrupt business, cause renewed labor and supply chain disruptions, and negatively impact the global

and US economy, which could materially and adversely impact our businesses.

Additionally, see Part I,

Item 1A “Risk Factors” for a description of the material risks we currently face in connection with COVID-19.

financial statements for additional information on the discontinued retail segment.

Variability of Revenues and Results of Operations

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OEM Distribution Segment

The OEM distribution

segment recognizes revenue when:

(i) finished goods are shipped to its customers (in general, these conditions occur at either point

of shipment or point of destination, depending on the terms of sale and transfer of control);

(ii) there are no other deliverables

or performance obligations;

The OEM distribution segment

recognizes revenue when:

(i) finished goods are shipped to its customers (in general, these conditions occur at either point of shipment

or point of destination, depending on the terms of sale and transfer of control);

(ii) there are no other deliverables or performance

and (iii) there are no further obligations to the customer after the title of the goods has transferred.

If 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.

If 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.

Design Segment

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judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit.

There were no indications

of goodwill impairment in Fiscal 2023 or Fiscal 2022.

During Fiscal 2024,

the Company recorded an impairment charge of $200,000 related to goodwill (See Note 4 to the consolidated financial statements).

Our intangible assets are

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There were no indications

of impairment of intangible assets in Fiscal 2023 or 2022.

of impairment of intangible assets in Fiscal 2024 or Fiscal 2023.

Recent Accounting Pronouncements

In November 2019, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 us for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years and is not expected

to have a material impact on our consolidated financial statements.

In December 2023, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, "Income Taxes - Improvements

to Income Tax Disclosures", requiring enhancements and further transparency to certain income tax disclosures, most notably the tax

rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis

and retrospective application is permitted.

The Company is currently evaluating the effects of this pronouncement on its consolidated

financial statements.

In November 2023, the FASB

issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which requires expanded

segment reporting and disclosure and is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the effects of this pronouncement 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 adopted this guidance in the first quarter of Fiscal 2024 with no material

impact on its consolidated financial statements.

RESULTS OF OPERATIONS FOR FISCAL 2024 COMPARED

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of continuing operations for Fiscal 2024 as compared to Fiscal 2023:

Consolidated Results of Operations

Consolidated Results of Continuing Operations

$ (6,493,000 )

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General and administrative expenses

Operating income

Other expense/(income), net

Goodwill impairment

Operating (loss) income

Other income, net

Income tax provision

Income from continuing operations

(Loss) / income from continuing operations

$ (1,948,000 )

$ (2,107,000 )

The decrease in net revenues

in Fiscal 2023 was primarily driven by a decline in revenue in the OEM distribution segment, which was partially offset by revenue growth

in the design segment.

in Fiscal 2024 was primarily driven by a decline in revenue in the OEM distribution segment and, to a lesser extent, the design segment.

Gross profit decreased and

gross margin declined from 22.8% in Fiscal 2023 to 20.6% in Fiscal 2024.

This decrease was mainly driven by the OEM distribution segment

because of continued pricing pressures from our customers, high product, importation and logistics costs and inflation.

This decrease was mainly driven by lower utilization rates in

our design segment and a change in the mix of our OEM distribution segment revenue, partially offset by a reduction in our sourcing fee

with Forward China.

Sales and marketing expenses

increased primarily due to higher sales related expenses in the design segment, partially offset by lower marketing related overhead in

our OEM distribution segment.

Sales and marketing expenses as a percentage of revenue increased from 3.9% in Fiscal 2022 to 4.5% in Fiscal

decreased primarily due to staff reduction in our OEM distribution segment and lower sales related expenses in the design segment.

and marketing expenses as a percentage of revenue increased from 4.5% in Fiscal 2023 to 4.7% in Fiscal 2024.

General and administrative

expenses decreased in Fiscal 2023, primarily related to bad debt recoveries in the design segment and lower non-employee directors share-based

compensation expense, partially offset by higher professional fees and personnel costs.

Management continues to monitor the various components

of general and administrative expenses and how these costs are affected by inflationary and other factors.

We intend to adjust these costs

as needed based on the overall needs of the business.

We reported other

income of $19,000 in Fiscal 2023 as compared to other expense of $135,000 in Fiscal 2022.

The variance is due to fair value

adjustments of $70,000 in the 2023 Period to reduce to the fair value of the earnout consideration related to the Kablooe

acquisition, $18,000 of net duty drawback income received in the 2023 Period, interest income from interest bearing deposits,

foreign currency fluctuations and a decrease in interest expense resulting from a reduction in the amount of debt outstanding.

expenses decreased slightly in Fiscal 2024.

Lower payroll costs were partially offset by increased corporate expenses, primarily driven

by costs related to Nasdaq non-compliance issues, and a credit loss recovery of approximately $200,000 in Fiscal 2023 that did not recur

in Fiscal 2024.

Management continues to monitor the various components of general and administrative expenses and how these costs are

affected by inflationary and other factors.

We intend to adjust these costs as needed based on the overall needs of the business.

During Fiscal 2024, the Company

recorded a goodwill impairment charge of $200,000 related to the Kablooe reporting unit, which is included in the design segment.

impairment charge resulted from the quantitative goodwill impairment testing performed at September 30, 2024 and was driven by historical

losses and a reduction in expected future performance of the Kablooe reporting unit.

We reported other income

of $7,000 in Fiscal 2024 as compared to $19,000 in Fiscal 2023.

The variance is due to fair value adjustments of $70,000 in Fiscal 2023

to reduce to the fair value of the earnout consideration related to the Kablooe acquisition, $18,000 of net duty drawback income received

in Fiscal 2023 offset by an increase in interest income from interest bearing deposits and a decrease in interest expense resulting from

a reduction in the amount of debt outstanding.

In Fiscal 2024, we recorded

a tax provision of $20,000, generated income from continuing operations before income taxes of $179,000 and had an effective tax rate

a tax provision of $23,000, incurred a loss from continuing operations before income taxes of $1,925,000 and had an effective tax rate

In Fiscal 2023, we recorded a tax provision of $20,000, generated income from continuing operations before income taxes of

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Consolidated basic and diluted

earnings per share from continuing operations was $0.02 and $0.04 for Fiscal 2023 and Fiscal 2022, respectively.

(loss)/earnings per share from continuing operations was ($1.77) and $0.14 for Fiscal 2024 and Fiscal 2023, respectively.

Segment Results

8 unchanged sentences

$ (2,695,000 )

Fiscal 2023 operating income

$ (6,493,000 )

Fiscal 2022 operating income

Fiscal 2024 operating income/(loss)

$ (2,327,000 )

$ (1,932,000 )

Fiscal 2023 operating income/(loss)

$ (2,156,000 )

$ (2,092,000 )

OEM Distribution

Net revenues in the OEM distribution

segment decreased from lower sales volume from both diabetic customers and other OEM customers.

As consumer demand increases for diabetic

testing products which require no carrying case, we expect diabetic product sales to continue to represent a smaller portion of our OEM

distribution revenue.

segment decreased from lower sales volume from our diabetic customers, slightly offset by an increase in revenues from other OEM customers.

As consumer demand increases for diabetic testing products which require no carrying case, we expect diabetic product sales to continue

to represent a smaller portion of our OEM distribution revenue.

In March 2023, a contract with one of our major diabetic customers expired.

Due to increased pricing pressures,

we did not extend our contract with this customer.

Revenue from this customer represented approximately 12% of our consolidated net revenues

in the 2022 Period.

We expect the loss of this customer to cause a significant decline in OEM distribution segment revenues in future

Due to increased pricing pressures, we did not extend our contract with this customer.

Revenue from this customer represented approximately

7.8% of our consolidated net revenues in Fiscal 2023.

We expect the loss of this customer to cause a significant decline in OEM distribution

segment revenues in future periods.

The following tables set

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Revenues from diabetic products

decreased due to the loss of a major customer in March 2023, lower demand from one major customer and the loss of one product to a competitor.

These decreases were partially offset by an increase in demand from another customer, which was timing related.

As mentioned above, management

believes that revenues from diabetic customers will continue to decline.

decreased due to the loss of a major customer in March 2023, lower demand from our major diabetic customers and the loss of one product

to a competitor.

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

Revenues from diabetic products

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Revenues from other products

decreased due to lower sales volume with some existing customers, partially driven by the delayed rollout of certain customer product

lines and reduced demand from some customers.

We will continue to focus on our sales and sales support teams in our continued efforts

to expand and diversify our other products customer base.

increased due to new customers and higher sales volume with some existing customers, partially offset by reduced demand from other customers.

We will continue to focus on our sales and sales support teams in our continued efforts to expand and diversify our other products customer

Operating Income

Operating income for the

OEM distribution segment declined and operating income margin declined to 3.1% in Fiscal 2023, compared to 5.0% in Fiscal 2022, driven

by lower gross margins and a shift in the mix of revenue.

While revenues decreased in both diabetic and other products, a large portion

of the decrease in diabetic revenue was from more profitable products, thus driving overall gross margins down.

The cost of importing

all products from China has increased and both the diabetic and other OEM product lines have experienced pricing pressures from customers.

The decline in gross margin was partially mitigated by lower selling and marketing costs related to OEM sales commissions.

to work on expanding our product offerings to include higher margin products and enhancing our sales efforts to grow revenue and increase

gross profit.

OEM distribution segment decreased but operating income margin increased to 3.6% in Fiscal 2024, compared to 3.1% in Fiscal 2023, driven

by a decrease in the sourcing fee and lower sales and marketing expenses.

While revenues decreased in diabetic products, a large portion

of this decrease was from lower margin products, driving overall gross margins up.

Lower selling and marketing costs further improved

the operating income margin.

We continue to work on expanding our product offerings to include higher margin products and enhancing our

sales efforts to grow revenue and increase gross profit.

Considering the loss of a

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Effective April 1, 2023, the Company and Forward China agreed to reduce the fixed portion of the

sourcing fee from $100,000 to $83,333 per month for the remaining term of the sourcing agreement, which resulted in cash savings of $100,000

for Fiscal 2023.

The Company and Forward China signed a new Supply Agreement effective October 2023, which further reduced the fixed portion

of the sourcing fee to $65,833 per month.

See Note 14 to the consolidated financial statements for more information on the sourcing agreement

with Forward China.

sourcing fee from $100,000 to $83,333 per month for the remaining term of the sourcing agreement.

The Company and Forward China signed

a new Supply Agreement effective October 2023, which further reduced the fixed portion of the sourcing fee to $65,833 per month and expired

October 2024.

In November 2024, the Company and Forward China agreed to:

(i) extend the sourcing agreement until April 30, 2025, but allow

either party to cancel with 30 days notice, (ii) reduce the fixed portion of the sourcing fee to $35,000 per month, and (iii) change the

payment terms to better align with payments from the Company’s customers.

See Note 14 to the consolidated financial statements for

more information on the sourcing agreement with Forward China.

Design Segment

The increase in net revenues

in the design segment was driven by an increase in revenue from one major customer, coupled with an increase in projects from new and

existing customers, which was partially offset by declines in revenues from certain prior year customers.

The decrease in net revenues

in the design segment was primarily driven by one customer whose revenue declined approximately $2,600,000, as well as a net decrease

in volume of work and projects with continuing customers, partially offset by projects from new customers.

In December 2024, our largest

design customer notified the Company of its plan to discontinue their insulin patch program, on which the Company was working.

this to cause a material decrease in our revenues beginning with the second quarter of fiscal 2025.

We are currently working on cost reduction

efforts to mitigate the reduction in revenue.

Operating income for the

design segment increased slightly but operating income margin decreased from 10.6% in Fiscal 2022 to 9.6% in Fiscal 2023.

The impact of

higher direct labor costs driven by inflationary pressures, coupled with higher sales and marketing expenses, was slightly offset by better

utilization and increased billing rates and lower general and administrative expenses, driven by bad debt recoveries.

design segment decreased and operating income margin decreased from 9.6% in Fiscal 2023 to 0.1% in Fiscal 2024.

This decrease was driven

by lower utilization rates, impairment of goodwill and credit loss recoveries in Fiscal 2023 that did not recur in Fiscal 2024, partially

offset by lower payroll costs and increased billing rates on some projects.

LIQUIDITY AND CAPITAL RESOURCES

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our working capital was $273,000 compared to $26,000 at September 30, 2023, which excludes discontinued assets held for sale.

was primarily due to higher payables and accrued expenses and a decrease in accounts receivable, partially offset by an increase in cash.

At November 30, 2023, we had approximately $3,800,000 cash on hand and $1,300,000 available under our line of credit with a bank which

matures May 31, 2024.

There are no assurances this line of credit will extend beyond May 31, 2024.

Forward China, our

largest vendor and an entity owned by our Chairman of the Board and Chief Executive Officer, holds a $1,600,000 promissory note (the

“FC Note”) issued by us which matures on December 31, 2024 (see Note 14 to the consolidated financial statements).

balance of the FC Note was reduced to $1,100,000 after we made principal payments of $500,000 in Fiscal 2023 and Fiscal 2022.

Although the FC Note has been extended on multiple occasions to assist us with our liquidity position, we plan on funding the

repayment at maturity using existing cash balances and/or obtaining additional extensions as deemed necessary.

Additionally, Forward

China has extended payment terms on our outstanding payables due to them when necessary.

At September 30, 2023, our accounts payable

due to Forward China was approximately $8,246,000.

In connection with the new sourcing agreement (see Note 14 to the consolidated

financial statements) and in order to preserve our future liquidity, Forward China agreed to limit the amount of outstanding

payables it would seek to collect from us to $500,000 in any 12-month period, which we agreed to pay within 30 days of any such

This agreement pertains only to payables that were outstanding at October 30, 2023 of $7,365,000.

Purchases from Forward

China made after October 30, 2023, are not covered by this agreement and are expected to be paid according to normal payment terms.

We can provide no assurance that (i) Forward China will extend the FC Note again if we request an extension, (ii) Forward China will

extend additional payment terms on any payables not covered by the agreement, if needed, or (iii) any additional credit

facility will be available on terms acceptable to us or at all.

We anticipate that our liquidity

and financial resources for the 12 months following the date 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.

was primarily due to the equity conversion of amounts due to Forward China (see Note 14 to the consolidated financial statements), lower

accrued expenses, partially offset by a decrease in accounts receivable and cash.

At November 30, 2024, we had approximately $2,300,000

cash on hand.

Forward China, our largest

vendor and an entity owned by our Chairman of the Board and Chief Executive Officer, holds a $1,600,000 promissory note (the “FC

Note”) issued by us which matures on June 30, 2025 (see Note 14 to the consolidated financial statements).

The balance of the FC

Note was reduced to $600,000 after we made principal payments of $1,000,000 through Fiscal 2024.

Although the FC Note has been extended

on multiple occasions to assist us with our liquidity position, we plan on funding the repayment at maturity using existing cash balances

and/or obtaining additional extensions as deemed necessary.

Additionally, Forward China has extended payment terms on our outstanding

payables due to them when necessary.

At September 30, 2024, our accounts payable due to Forward China was approximately $7,226,000.

connection with the new sourcing agreement entered into October 2023 (see Note 14 to the consolidated financial statements) and in order

to preserve our future liquidity, Forward China agreed to limit the amount of outstanding payables it would seek to collect from us to

$500,000 in any 12-month period, which we agreed to pay within 30 days of any such request.

This agreement pertains only to payables that

were outstanding at October 30, 2023 of $7,365,000.

Purchases from Forward China made after October 30, 2023, are not covered by this

agreement and are expected to be paid according to normal payment terms.

At September 30, 2024, the remaining balance covered by this

agreement was approximately $4,881,000.

We can provide no assurance that (i) Forward China will extend the FC Note again if we request

an extension, (ii) Forward China will extend additional payment terms on any payables not covered by the agreement if needed, or (iii)

any additional credit facility will be available on terms acceptable to us or at all.

Our consolidated financial statements have been

prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and

satisfaction of liabilities in the ordinary course of business.

We had an accumulated deficit and working capital of $19,637,000 and $273,000,

respectively, at September 30, 2024, a net loss of $1,951,000 in Fiscal 2024 and a cash balance of approximately $2,300,000 at November

In December 2024, our largest design customer

notified us of its plan to discontinue their insulin patch program, on which we were working.

We expect this to cause a material

decrease in our revenues beginning with the second quarter of Fiscal 2025.

Based on our forecasted cash flows, we believe that there is

substantial doubt about our ability to continue as a going concern for a period of 12 months from the date of issuance of the consolidated

financial statements.

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 or obtain

additional borrowings, there is no assurance that we will be able to raise funds on terms that are acceptable to us or at all.

current environment of rising interest rates, any future borrowing is expected to result in higher interest expense.

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Operating Activities

During Fiscal 2023,

cash provided by operating activities of $1,041,000 resulted from a decrease in discontinued assets held for sale of $2,642,00, an

increase in accounts payable and amounts due to Forward China of $783,000, an increase in accounts receivable of $495,000, non-cash

charges for depreciation, amortization, share-based compensation and bad debt expense of $481,000 and the net change in other

operating assets and liabilities of $427,000, partially offset by the $70,000 non-cash adjustment to the fair value of the Kablooe

earnout consideration and the net loss of $3,737,000.

During Fiscal 2024, cash

provided by operating activities of $1,535,000 resulted from an increase in accounts payable and amounts due to Forward China of $1,856,000,

a decrease in accounts receivable of $953,000, non-cash charges for depreciation, amortization, share-based compensation and bad debt

expense of $775,000, an increase in accrued expenses of $624,000 and the net change in other operating assets and liabilities of $552,000,

partially offset by the net loss of $1,378,000 and an increase in discontinued assets held for sale of $1,847,000.

provided by operating activities of $407,000 resulted from a decrease in accounts receivable of $1,244,000, a decrease in discontinued

assets held for sale of $508,000, an increase in amounts due to Forward China (excluding the non-cash impact of the Conversion Agreements)

of $1,180,000, and non-cash charges for depreciation, amortization, share-based compensation, credit loss expense and goodwill impairment

of $654,000, partially offset by the net loss of $1,951,000, a decrease in accrued expenses and other current liabilities $745,000, a

decrease in accounts payable $390,000 and the net change in other operating assets and liabilities of $93,000.

During Fiscal 2023, cash

provided by operating activities of $1,041,000 resulted from a decrease in discontinued assets held for sale of $2,642,000, an increase

in accounts payable and amounts due to Forward China of $783,000, an increase in accounts receivable of $495,000, non-cash charges for

depreciation, amortization, share-based compensation and credit loss expense of $481,000 and the net change in other operating assets

and liabilities of $447,000, partially offset by the $70,000 non-cash adjustment to the fair value of the Kablooe earnout consideration

and the net loss of $3,737,000.

Investing Activities

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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 7. Management’s Discussion and Analysis