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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE | 9 Months Ended
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Jun. 30, 2025
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE |
NOTE 3 | DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
In July 2023, the Company decided to cease operations of its retail distribution segment (“Retail Exit”). The primary assets of the retail segment were inventory and accounts receivable. The Company sold, liquidated, or otherwise disposed of all remaining retail inventory, and collected remaining retail accounts receivable by September 30, 2024, at which time the retail segment was considered fully discontinued. We expect to have no further significant continuing involvement with this segment. The Retail Exit was considered a strategic shift that would have a significant impact on the Company’s operations and financial results. The inventory of the retail segment met the criteria to be considered “held-for-sale” in accordance with ASC 205-20, “Discontinued Operations.” Accordingly, the retail inventory was classified on our condensed consolidated balance sheets as “discontinued assets held for sale” at September 30, 2023, and the results of operations for the retail segment have been classified as “Discontinued Operations” on the condensed consolidated statements of operations for the three and nine months ended June 30, 2025 and 2024. In March 2025, in connection with the fourth Conversion Agreement (see Note 8), Forward China determined it would not renew the Buying Agency and Supply Agreement (“Sourcing Agreement”), which subsequently expired on May 9, 2025 (see Note 8). Without this agreement, the Company determined it would not continue the OEM segment of the business and committed to a plan to sell the segment. On May 16, 2025, the Company and Forward US entered into a transaction agreement with Forward China, pursuant to which the Company sold all equity interest in Forward Switzerland and Forward UK and sold certain other net assets related to Forward US’ OEM segment to Forward China to satisfy outstanding payables due to Forward China under the Sourcing Agreement. Additionally, the Company and Forward China terminated the Supply Agreement and extended the term of the Note Payable (see Note 8) to December 31, 2025. The Company paid $200,000 at closing and agreed to make additional cash payments of $150,000 on each of July 31, 2025, August 31, 2025 and September 30, 2025, which are shown as Due to Forward China on the condensed consolidated financial statements. Results of operations for Forward Switzerland and Forward UK were included in the Company’s results of operations through and including May 16, 2025. The sale of the OEM business is considered a strategic shift that will have a significant impact on the Company’s operations and financial results. The assets and liabilities of the OEM segment were classified as assets and liabilities held for sale on the condensed consolidated balance sheets at September 30, 2024. The results of operations for the OEM segment have been classified as discontinued operations on the condensed consolidated statements of operations for the three and nine months ended June 30, 2025 and 2024. The condensed consolidated balance sheets and statements of operations for comparable periods have been reclassified to conform to this presentation in accordance with the accounting guidance. The following table presents the major components of the “Income from discontinued operations, net of tax” in our condensed consolidated statements of operations:
Schedule of discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Revenues, net |  | $ | 845,000 |  |  | $ | 2,824,000 |  |  | $ | 5,563,000 |  |  | $ | 8,350,000 |
Cost of sales |  |  | 660,000 |  |  |  | 2,547,000 |  |  |  | 4,445,000 |  |  |  | 7,305,000 |
Gross profit |  |  | 185,000 |  |  |  | 277,000 |  |  |  | 1,118,000 |  |  |  | 1,045,000 |
Sales and marketing expenses |  |  | 64,000 |  |  |  | 163,000 |  |  |  | 360,000 |  |  |  | 711,000 |
General and administrative expenses |  |  | (27,000 | ) |  |  | 59,000 |  |  |  | 49,000 |  |  |  | 194,000 |
Operating income from discontinued operations |  |  | 148,000 |  |  |  | 55,000 |  |  |  | 709,000 |  |  |  | 140,000 |
Gain on sale of discontinued operations |  |  | 1,406,000 |  |  |  | – |  |  |  | 1,406,000 |  |  |  | – |
Net income from discontinued operations |  | $ | 1,554,000 |  |  | $ | 55,000 |  |  | $ | 2,115,000 |  |  | $ | 140,000 |
There were no depreciation, amortization, or financing cash flow activities for the discontinued operations in the three or nine months ended June 30, 2025 or 2024. Investing cash flows related to the discontinued operations included $200,000 paid for the sale of the OEM segment in May 2025. The only significant non-cash activity for the discontinued operations in the three and nine months ended June 30, 2025 and 2024 was the conversion of accounts payable to Forward China into preferred stock in February and March of 2025 (See Note 8). The following table presents the major components of assets and liabilities held for sale on our condensed consolidated balance sheet at September 30, 2024:
Schedule of major components of assets and liabilities |  |  |  |
Cash |  | $ | 245,000 |
Accounts receivable, net |  |  | 2,124,000 |
Inventories |  |  | 490,000 |
Prepaid expenses and other current assets |  |  | 49,000 |
Total assets held for sale |  |  | 2,908,000 |
Accounts payable |  | $ | 25,000 |
Due to Forward China |  |  | 7,226,000 |
Other current liabilities |  |  | 42,000 |
Total liabilities held for sale |  | $ | 7,293,000 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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