UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from________________ to_____________ Commission File Number 001-34780 Forward Industries, Inc. (Exact Name of Registrant as Specified in its Charter) | New York | 13-1950672 ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Forward Industries, Inc.'s Q1 2019 unaudited financial statements report a **net loss of $530,527** and **negative operating cash flow of $789,668** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2018, total assets were **$19.37 million**, liabilities **$8.79 million**, and shareholders' equity **$10.58 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2018 | Sep 30, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$19,368** | **$19,228** | | Total Current Assets | $15,424 | $15,212 | | **Total Liabilities** | **$8,788** | **$8,128** | | Total Current Liabilities | $8,335 | $7,624 | | Line of credit | $1,300 | $350 | | **Total Shareholders' Equity** | **$10,581** | **$11,100** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Q1 2019 reported a **net loss of $530,527**, a downturn from prior year, due to surging operating expenses despite revenue growth Statement of Operations Summary (in thousands) | Metric | Q1 2019 (ended Dec 31, 2018) | Q1 2018 (ended Dec 31, 2017) | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $10,183 | $6,336 | +60.7% | | Gross Profit | $1,303 | $1,003 | +29.9% | | Total Operating Expenses | $1,784 | $952 | +87.4% | | Income (Loss) from Operations | ($481) | $51 | N/A | | Net Income (Loss) | ($531) | $47 | N/A | | Basic EPS | ($0.06) | $0.01 | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2019 reported **net cash used in operating activities of $789,668**, a reversal from prior year, with a **net cash increase of $47,415** Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2019 (ended Dec 31, 2018) | Q1 2018 (ended Dec 31, 2017) | | :--- | :--- | :--- | | Net cash from Operating Activities | ($790) | $1,300 | | Net cash from Investing Activities | ($20) | ($19) | | Net cash from Financing Activities | $857 | $0 | | **Net increase in cash** | **$47** | **$1,281** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business structure, accounting policies, two operating segments, customer concentration, and related party transactions - The company operates through two distinct segments following the January 2018 acquisition of IPS: Distribution (comprising Forward US, Switzerland, and UK) and Design (comprising IPS)[27](index=27&type=chunk) - The company adopted the new revenue recognition standard, ASC 606, effective October 1, 2018, using the modified retrospective method, which did not have a material impact on revenue recognition[45](index=45&type=chunk)[46](index=46&type=chunk) - The company has significant customer concentration. In the Distribution segment, four customers accounted for **82.9% of revenue**. In the Design segment, three customers accounted for **49.6% of revenue** for the quarter[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - A key related party transaction involves a Buying Agency and Supply Agreement with Forward China, which is owned by the company's CEO. The company also has a **$1.6 million promissory note** payable to Forward China, with its due date extended to April 18, 2019[95](index=95&type=chunk)[96](index=96&type=chunk)[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2019 financial results, noting **60.7% revenue growth** but a **net loss of $531,000** due to project overruns and increased expenses - The company's operations are managed across two segments: Distribution (historically the OEM business) and Design (the IPS business acquired in January 2018)[112](index=112&type=chunk) Consolidated Results of Operations (in thousands) | Metric | Q1 2019 | Q1 2018 | Change | | :--- | :--- | :--- | :--- | | Net revenues | $10,183 | $6,336 | $3,847 | | Gross profit | $1,303 | $1,003 | $300 | | Operating income (loss) | ($481) | $51 | ($532) | | Net income (loss) | ($531) | $47 | ($578) | - The company anticipates that its liquidity and financial resources will be adequate to manage operating requirements for the next 12 months[144](index=144&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q1 2019 saw Distribution revenue decline and the Design segment contribute revenue but incur a significant net loss due to project overruns - Distribution segment revenue decreased **1% to $6.28 million**, primarily due to a **6% decline in Diabetic Product revenues**[123](index=123&type=chunk)[125](index=125&type=chunk) - The Design segment, acquired in January 2018, generated **$3.9 million in revenue** but had a low gross margin of **8.1%** due to project overruns. Management expects margins to return to historical levels above **20%**[130](index=130&type=chunk)[132](index=132&type=chunk) Segment Performance (in thousands) | Segment | Net Revenues (Q1 2019) | Net Income (Loss) (Q1 2019) | Net Income (Loss) (Q1 2018) | | :--- | :--- | :--- | :--- | | Distribution | $6,281 | ($32) | $47 | | Design | $3,902 | ($499) | N/A | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital was **$7.1 million** as of Dec 31, 2018, with **negative operating cash flow of $790,000** and **$1.3 million** utilized on the line of credit - Cash used in operating activities was approximately **$790,000** for the quarter, primarily due to a **net loss of $531,000** and an increase in accounts receivable[146](index=146&type=chunk) - As of the filing date, the company had **$100,000** available under its **$1.3 million line of credit**. The maturity on a **$1.6 million promissory note** to Forward China was extended to April 18, 2019[143](index=143&type=chunk) Key Liquidity Ratios | Ratio | Dec 31, 2018 | Sep 30, 2018 | | :--- | :--- | :--- | | Current Ratio | 1.9 | 2.1 | | Quick Ratio | 1.7 | 1.8 | | Working Capital | $7.1M | $7.6M | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company - Not applicable[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, excluding IPS, which will be incorporated in Q2 Fiscal 2019 - Management concluded that disclosure controls and procedures are effective as of the end of the period covered by the report[156](index=156&type=chunk) - The evaluation of controls and procedures excluded IPS, which was acquired in January 2018. IPS will be incorporated into the assessment during the second quarter of Fiscal 2019[157](index=157&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) As of December 31, 2018, the company was not a party to any material legal actions or proceedings - As of December 31, 2018, there were no material legal actions or proceedings against the company[162](index=162&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[163](index=163&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[164](index=164&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Exhibits listed in the 'Index to Exhibits' are filed or incorporated by reference as part of this Form 10-Q - The exhibits listed in the accompanying 'Index to Exhibits' are filed or incorporated by reference as part of this Form 10-Q[168](index=168&type=chunk)