NOTE 3              DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

In March 2025, in connection with the fourth Conversion Agreement (see Note 9), Forward China determined it would not renew the Buying Agency and Supply Agreement (“Sourcing Agreement”), which subsequently expired on May 9, 2025 (see Note 9). 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: (i) 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; (ii) the Company and Forward China terminated the Sourcing Agreement and extended the term of the Note Payable (see Note 9) to December 31, 2025; and (iii) the Company paid Forward China $200,000 at closing plus $150,000 on each of July 31, 2025, August 31, 2025 and September 30, 2025. 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 was considered a strategic shift that had 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, 2025. 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.

The following table presents the major classes of the “income from discontinued operations, net of tax” in our condensed consolidated statement of operations for the three and nine months ended June 30, 2025.

There were no material amounts of depreciation, amortization or financing cash flow activities in the three or nine months ended June 30, 2025. Investing cash flows related to the discontinued operations for the three and nine months ended June 30, 2025 included $200,000 paid for the sale of the OEM segment. The only significant non-cash activity for the discontinued operations in the three and nine months ended June 30, 2025 was the conversion of accounts payable to Forward China into preferred stock in February and March of 2025 (See Note 9).