FORWARD INDUSTRIES, INC. Form 10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2025
☐ 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)
700 Veterans Memorial Highway, Suite 100, Hauppauge,
NY11788
(Address of principal executive offices, including zip code)
(631) 547-3055
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of
the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes
☐ No
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See
the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act).
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of March 31, 2025, the aggregate market value of
the registrant’s common stock held by non-affiliates of the registrant was approximately $3,300,000 based on the closing price as
reported on the Nasdaq Stock Market.
There were 86,459,465 shares of the registrant’s
common stock outstanding as of December 5, 2025.
Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement
for the 2026 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the
extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s
fiscal year ended September 30, 2025.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
Page No.
PART I
Item 1. Business 1
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 28
Item 1C. Cybersecurity 28
Item 2. Properties 29
Item 3. Legal Proceedings 30
Item 4. Mine Safety Disclosures 30
PART II
Item 6. Reserved 31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38
Item 8. Financial Statements and Supplementary Data 38
Item 9A. Controls and Procedures 38
Item 9B. Other Information 39
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 39
PART III
Item 10. Directors, Executive Officers and Corporate Governance 40
Item 11. Executive Compensation 40
Item 14. Principal Accountant Fees and Services 40
PART IV
Item 15. Exhibits and Financial Statement Schedules 41
Signatures 42
i
PART I
ITEM 1. BUSINESS
General
Forward Industries, Inc.
(“Forward”, “we”, “our” or the “Company”), through its wholly-owned subsidiaries, Forward
Industries (IN), Inc. (“Forward US”), DE Sub 1, LLC (“Forward Delaware”), Forward Industries (Switzerland) GmbH
(“Forward Switzerland”), Forward Industries UK Limited (“Forward UK”), Intelligent Product Solutions, Inc. (“IPS”),
and Kablooe, Inc. (“Kablooe”), is a design company serving top tier medical and technology customers. The Company provides
hardware and software product design and engineering services to customers predominantly located in the U.S. The Company also acquires
and holds Solana (“SOL”) and other digital assets and has adopted SOL as its primary treasury reserve asset.
On November 17, 2025, the Company
changed its ticker symbol on the Nasdaq Capital Market from FORD to FWDI.
Design Business
Our design business provides
a complete range of design, engineering and development services with respect to a diverse array of consumer and industrial electronics
products. These include but are not limited to medical products, smart displays, beverage vending, enterprise and mobile software applications,
lighting, security and detections systems, cameras, wearables and vehicle controls. Solutions in these and other areas are designed and
developed in-house, beginning at product concept, extending through design, engineering and prototype, and final design for manufacturing
and computer-aided design files.
Services offered in our design
business vary from full development utilizing a wide range of in-house design and engineering functions, to targeted design and engineering
support for clients with in-house development teams. Our in-house capabilities include the following:
· Electrical Engineering
· Mechanical Engineering
· Software Engineering
· Industrial Design
· User Experience/User Interface (UX/UI) Design and Development
· Optical Engineering
· Program Management
· IoT System Architecture
· IT Support
There are very few suppliers
required for the design segment of the business as it is a service-based business. We do, however, purchase supplies and equipment to
develop prototypes or “mock-ups” for design and development projects. Design business suppliers are predominantly based in
the United States.
Our design business follows
general industry standard practices for review and corrective actions related to its design services. There are no independent quality
assurance standards in place for its design and engineering work. Customer specifications and scope of services are laid out in project
contracts and we work closely with the customer to identify and correct any quality issues that arise.
The depth and breadth of services
offered, and industries served by our design segment are unique. Our management team is aware that there are very few competitive firms
that have the full set of capabilities that our design segment has under one roof. There are, however, numerous design and engineering
companies that compete with us in specific industries and/or with specific targeted skills or have competitive advantages.
New Digital Asset Treasury Strategy
In September 2025, we announced
the launch of our digital asset treasury strategy, pursuant to which we plan to pursue a number of strategic initiatives to acquire Solana
(“SOL”) and other digital assets. We entered into asset management and services agreements to guide us through the implementation
of our new digital assets treasury business. On September 15, 2025, we announced our initial liquid SOL purchases of 6,822,000 at an average
price of $232 per SOL, or approximately $1.58 billion in the aggregate.
Under our new treasury policy
and strategy (the “Treasury Policy”), the principal holding in our treasury reserve on the balance sheet will be allocated
to digital assets, primarily SOL, by applying a public-market treasury model to an asset that we believe is earlier in its lifecycle,
structurally reflexive, and underexposed as compared to Bitcoin. Our planned approach involves acquiring SOL directly through market purchases
and staking our holdings via our own or third-party operated validators and generating incremental revenue through strategic partnerships
and deployments within the Solana ecosystem.
In addition to operating our
hardware and software product design and engineering services business, our management will focus its resources on our new Treasury Policy
and a significant portion of the balance sheet will initially be allocated to holding SOL in our digital asset treasury.
Currently, our new Treasury Policy
is primarily dedicated to SOL and other Solana ecosystem tokens. As a result, our assets are highly concentrated in digital assets, particularly
SOL. Adverse developments specific to SOL, its protocol, or its ecosystem could have a materially disproportionate impact on our financial
condition and results of operations. We may utilize a range of capital markets and onchain strategies, including staking, lending, and
participation in decentralized finance (“DeFi”) protocols, as well as pursuing accretive partnerships and acquisitions
within the Solana ecosystem.
Competitive Conditions in the Digital Asset Treasury
Business
The digital asset treasury business
is characterized by a dynamic and evolving competitive landscape. Publicly listed digital asset treasury companies primarily pursue strategies
centered on holding digital assets.
As the digital asset treasury
sector evolves, competition is intensifying among companies that diversify their holdings beyond Bitcoin to include other digital assets
(such as Ethereum and SOL). This shift toward a broader range of asset holdings is reshaping the competitive landscape, as treasury companies
seek to distinguish themselves by capitalizing on the unique advantages offered by different digital assets. The increasing variety of
assets under management and deployment strategies is driving new dynamics and heightened competitiveness within the sector.
Periods of market volatility
and downturns may result in financial distress for smaller or less-established digital asset treasury companies, creating opportunities
for larger, more stable participants to pursue accretive mergers and acquisitions and further consolidate the market.
We believe that our focus on
SOL and the Solana ecosystem, combined with our capital markets and onchain strategies, positions us to compete effectively within this
rapidly developing market. However, the competitive conditions described above may impact our ability to achieve our strategic objectives
and could affect the value of our digital asset holdings.
Our Treasury Policy
Our Treasury Policy is intended
to bring value to our shareholders through the following planned initiatives:
· actively participating in DeFi protocols and other onchain strategies;
We believe that SOL is currently
the fastest and most used public blockchain in the world, processing more transactions and generating more on chain fee revenue than all
other blockchains combined. We believe Solana has established itself as a high-performance blockchain and one of the most active onchain
ecosystems, primarily due to its differentiated approach to blockchain design, committed and growing developer community, and strong social
layer.
There can be no assurance that
the value of SOL will increase, and investors should carefully consider the risks associated with digital assets. See “Risk Factors
– Risks Related to the Company’s Digital Assets Strategy and Holdings” for additional information.
How We Earn Staking Rewards
To earn staking rewards, we intend
to delegate our SOL to our own validators, which are operated by third-party service providers through a white-label arrangement. We may
also delegate to other third-party SOL validators via Solana’s in-protocol delegation system. We will continue to keep the SOL in
custody with third party custodians. This means we deposit our SOL into a stake account, which is then delegated to a validator’s
vote account. Both our validators and the third-party validators we select are integrated into our qualified custodians’ platforms,
allowing us to stake SOL to them directly from our custody accounts. We maintain beneficial ownership of the SOL during the staking process.
We will work closely with our white-label service provider for our validators to achieve a track record of high performance, high yield
generation, and attractive delegator economics. We will also delegate to other third-party validators who, in our opinion, have demonstrated
a similar track record. We will use multiple validators, both our own and third-party, to seek to maximize the return on our SOL treasury
and to mitigate the risk of having only one or two validators for our treasury staking. We may also negotiate bespoke arrangements with
DeFi teams and validator operators to further enhance returns.
How We Manage Liquidity
We acknowledge that during the
deactivation period, as described below, staked SOL is not earning rewards and is not yet liquid. We factor this into our liquidity and
risk management framework.
Our staking program involves
a temporary loss of transferability of staked SOL during the “deactivation” or cooldown period when staking has ceased. Under
normal conditions, we expect to regain complete control over un-staked SOL within approximately 48 hours; however, network conditions
could extend this period. To mitigate liquidity risk, we intend to maintain a portion of our treasury in un-staked SOL and cash to meet
short-term obligations. We may also utilize capital markets instruments, such as structured products and non-dilutive debt, to enhance
liquidity and expand our SOL holdings. Our use of SOL options may involve margin requirements or collateral posting, which could reduce
available liquidity. Option premiums paid or received may also create volatility in our near-term cash flows.
We also intend to participate
in liquid staking protocols by converting a portion of our SOL holdings into Liquid Staking Tokens (“LSTs”). This will
allow us to earn staking rewards while maintaining the liquidity of our underlying SOL and enabling us to use the LSTs in various DeFi
applications. We may manage a mix of traditionally staked SOL and LSTs to optimize liquidity.
Use of Custodians and Storage
of SOL
We utilize multiple U.S. based
and regulated third-party qualified custodians to hold our SOL, except for a nominal amount held in a hot wallet used for petty payments.
We believe these qualified custodians utilize risk management and operational best practices related to key management, hardware and software
components, access controls, cyber security and insurance, among other practices.
Our primary custodians generally
maintain the majority of their custodied SOL holdings in cold storage (>95%), with hot wallets used only for limited operational purposes.
Custodians employ SOC 2–audited security controls, geographic redundancy, multi-person approval processes, and conduct key-generation
ceremonies in offline, secure facilities. Private keys are never exposed to networked devices. Custodians maintain insurance coverage,
which is in addition to policies we maintain ourselves. Our custody agreements typically run for one to three years, may be terminated
on 30 days’ notice, and include fees for storage and transactions. Our qualified custodians do not rehypothecate or otherwise use
our SOL.
Use of DeFi Protocols
We may from time to time interact
with DeFi protocols, either directly or indirectly through staking, validator operations, custody arrangements, or liquidity management
activities. DeFi protocols generally rely on open-source smart contracts deployed on public blockchains, including SOL. While these smart
contracts are intended to operate automatically according to their code, they may contain coding errors, vulnerabilities, or design flaws
that can be exploited. We actively evaluate DeFi opportunities within the Solana ecosystem to enhance treasury productivity, while maintaining
robust risk management practices.
SOL - The Token of the Solana
Blockchain
SOL is the native token of the
Solana blockchain. SOL was created with an initial supply of 500 million SOL, though much of the initial supply was locked or earmarked
for various use cases including the community, the foundation and investors. New SOL are brought into existence primarily through inflationary
rewards distributed to validators and delegators. The SOL staking yield is made up of three primary components: inflationary rewards,
transaction/priority fees, and maximal extractable value. Inflationary rewards started out at 8.0%, and are currently 4.3%, and will fall
15% every epoch-year until they reach a long-term floor of 1.5%. Unlock schedules applicable to these allocations may periodically increase
circulating supply, creating potential selling pressure and adversely affecting the price of SOL. Historically, 50% of all transaction
fees were burned (with the other 50% going to the validator), but now all transaction fees go to the validator after the passage and adoption
of the Solana Improvement Document 96.
How SOL is Used
SOL is used as part of Solana’s
proof-of-stake consensus mechanism. In general, proof-of-stake blockchains have block producers called validators that run nodes, bond
or stake the protocol’s native token, propose blocks when chosen to do so, and validate/sign the transactions and blocks of others
when not proposing such blocks. Validators are chosen to produce a block in proportion to their stake, which makes it extremely costly
for bad actors to attempt to control the network and add invalid transactions to the blockchain. Validators receive staking rewards for
the work they perform, which further incentivizes validators to behave properly, as they would otherwise miss out on such rewards. Other
proof-of-stake networks often “slash” some or all of a validator’s stake if it intentionally or unintentionally performs
its duties poorly, for example, by double-signing a transaction. Solana, however, has not implemented slashing at this time. In addition
to its use within consensus, SOL is also a “gas token,” meaning that users of the Solana blockchain pay SOL to validators
(and delegators) as compensation for processing their transactions.
We believe there are three particularly
notable items giving Solana a technical advantage compared to many smart contract blockchain peers. Solana’s proof-of-history gives
validators a notion of time and allows them to produce blocks without requiring the network to first agree upon the current block, resulting
in speed advantages. Further, unlike peer blockchains that often use single-threaded virtual machines, Solana enables parallel transaction
execution to increase throughput and take advantage of future hardware improvements resulting from increased CPU core counts. In addition,
Solana is optimized for speed and security, and is naturally growing into decentralization as hardware and bandwidth costs fall over time,
which we believe will position it well along the so-called “blockchain trilemma,” which refers to the trade-offs between scalability,
security, and decentralization.
While Solana Labs and the Solana
Foundation have played important roles in the development of the Solana ecosystem, no single entity owns or controls the Solana network.
However, concentration of influence in these entities, particularly in early-stage protocol governance, presents risks that investors
should consider.
The Solana Ecosystem
Solana’s performance and
technical capabilities enable many use cases from DeFi to decentralized physical infrastructure networks, AI agents, social media, gaming,
stablecoins, real-world assets, among others. We believe Solana is advantaged by best-in-class technology and strong network effects that
have attracted a large, growing, and vibrant ecosystem of users, developers, and decentralized applications.
See “–Regulation
and Environmental Protection” below for a description of the current normative framework applicable to Solana and SOL.
Discontinued Operations
In July 2023, the Company decided
to cease operations of its retail distribution segment (“Retail Exit”) and is presenting the results of operations for this
segment within discontinued operations in the periods presented herein. Our retail distribution business sourced and sold smart-enabled
furniture, hot tubs and saunas and a variety of other products through various online retailer websites to customers predominantly located
in the U.S. and Canada. The inventory of the retail segment was presented as discontinued assets held for sale on the balance sheet on
September 30, 2023.
In March 2025, the Company committed
to a plan to sell the original equipment manufacturer (“OEM”) distribution segment of the business (“OEM Plan”).
In May 2025, the Company completed the sale of this line of business and is presenting its results of operations within discontinued operations
in the current and prior periods presented herein. The OEM distribution segment sourced and sold carrying cases and other accessories
for medical monitoring and diagnostic kits as well as a variety of other portable electronic and non-electronic devices to OEMs or their
contract manufacturers worldwide, that either packaged our products as accessories “in box” together with their branded product
offerings or sold them through their retail distribution channels. The Company did not manufacture any of its OEM products and sourced
substantially all of these products from independent suppliers in China, through Forward Industries Asia-Pacific Corporation, a British
Virgin Islands corporation (“Forward China”), a related party owned by the Company’s former CEO (see Note 8 to the consolidated
financial statements).
Unless otherwise noted, amounts
related to these discontinued operations are excluded from the disclosures presented herein. See Note 3 to the consolidated financial
statements for more information on these discontinued operations.
Corporate History
Forward was incorporated in 1961
as a manufacturer and distributer of advertising specialty and promotional products. In 1989, we acquired Forward US, a manufacturer of
soft-sided carrying cases. The carrying case business became our predominant business, and in September 1997, we sold the assets relating
to the production of advertising specialty and promotional products, ceasing to operate in that segment.
In May 2001, we formed Forward
Switzerland to facilitate distribution of aftermarket products under our licenses for cell phone cases and to further develop our OEM
European business presence. After the expiration of the last of these licenses in March 2009, staff at Forward Switzerland was significantly
reduced and in recent years primarily served our OEM customers in Europe.
In January 2018, we acquired
IPS, an engineering design company, and in August 2020, we acquired the assets of Kablooe Design, a medical and consumer design and development
company. We believe that the design and engineering service capabilities of Kablooe has complemented the IPS business and further diversified
the industries and customers with which we do business.
In May 2025, we sold our Switzerland
and UK subsidiaries in connection with our decision to discontinue the OEM segment of our business.
In addition to operating our
hardware and software product design and engineering services business, our management will focus its resources on our new Treasury Policy
and a significant portion of the balance sheet will initially be allocated to holding SOL in our digital asset treasury.
Human Capital/Employees
As of November 30, 2025, we had approximately
60 employees, substantially all of whom work full-time, none of which are covered by a collective bargaining agreement. We hire consultants
on an as-needed basis.
Human capital management is critical
to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce
where employees are inspired by leadership, engaged in purpose-driven, meaningful work and have opportunities for growth and development.
We are committed to creating and maintaining a work environment in which employees are treated with respect and dignity. We
value our employees and provide career and professional development opportunities that foster the success of the Company.
An effective approach to human
capital management requires that we invest in talent, development, culture and employee engagement. We aim to create an environment where
our employees are encouraged to make positive contributions and fulfill their potential. We emphasize our core values of innovation, encouragement,
motivation, and curiosity with our employees to instill our culture and create an environment of growth and positivity.
Our Compensation Committee is
also actively involved in reviewing and approving executive compensation and succession plans so that we have leadership in place with
the requisite skills and experience to deliver results the right way. We offer fair, competitive compensation and benefits that support
our employees’ overall wellbeing. In addition to health benefits, we contribute to employees’ 401(k) plans and offer student
tuition reimbursement (if certain requirements are met).
Board Advisors
In addition to our core employee
base, we have incorporated a group of over 20 special advisors and consultants who provide strategic guidance to management and our Board
of Directors, particularly with respect to the development and oversight of our new Treasury Policy. These advisors and consultants bring
significant expertise and industry experience. Their contributions are integral to our efforts to enhance our policies and help ensure
alignment with our long-term business objectives.
Services and Asset Management
Agreements
In September 2025, we entered
into two significant agreements to support the launch and ongoing management of our new Treasury Policy. Under the Asset Management Agreement,
we appointed Galaxy Digital Capital Management LP, an SEC-registered investment adviser, as Asset Manager to provide investment management
services. The Asset Manager is responsible for investment decisions but does not act as custodian or take possession of our assets, which
remain titled in our name.
Concurrently, we entered into
a Services Agreement, pursuant to which Galaxy Digital LP, as Service Provider, delivers operational, financial, and human resources support
to facilitate the establishment and operation of our new Treasury Policy. The Service Provider does not provide tax, legal, or Investment
Company Act-related advice.
These agreements are integral
to our ability to effectively manage our digital asset strategy and operational infrastructure, and reflect our commitment to prudent
governance and the enhancement of shareholder value.
Regulation and Environmental Protection
There are no specific regulatory
or environmental requirements imposed upon the design segment of our business. As a paid service provider, customers are assisted in securing
regulatory certifications including UL (Underwriters Laboratories – a U.S. based safety certification organization), FCC (Federal
Communications Commission – U.S. governmental certification department for electronic goods), CE (Conformité Européenne
– a European certification for health, safety and environmental protection standards) and others depending on needs, product types
and locations of customers’ product markets.
Depending on the regulatory characterization
of Solana, the markets for cryptocurrency in general, and our activities in particular, our business and our Solana acquisition strategy
may be subject to regulation by one or more regulators in the United States and globally. Ongoing and future regulatory actions may alter,
to a materially adverse extent, the nature of digital assets markets, the participation of industry participants, including service providers
and financial institutions in these markets, and our ability to pursue our Treasury Strategy. Additionally, U.S. state and federal and
foreign regulators and legislatures have taken action against industry participants, including digital assets businesses, and enacted
restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets
activity. U.S. federal and state energy regulatory authorities are also monitoring the total electricity consumption of cryptocurrency
mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of the wholesale grid and retail distribution
systems. Many state legislative bodies have passed, or are actively considering, legislation to address the impact of cryptocurrency mining
in their respective states.
The Commodity Futures Trading
Commission (the “CFTC”) takes the position that certain digital assets fall within the definition of a “commodity”
under the Commodity Exchange Act of 1936, as amended (the “CEA”). Under the CEA, the CFTC has broad enforcement authority
to police market manipulation and fraud in spot digital assets markets in which we may transact. Beyond instances of fraud or manipulation,
the CFTC generally does not oversee cash or spot market exchanges or transactions involving digital asset commodities that do not utilize
margin, leverage, or financing. In addition, CFTC regulations and CFTC oversight and enforcement authority apply with respect to futures,
swaps, other derivative products and certain retail leveraged commodity transactions involving digital asset commodities, including the
markets on which these products trade.
In addition, because transactions
in SOL provide a degree of anonymity, they are susceptible to misuse for criminal activities, such as money laundering. This misuse, or
the perception of such misuse, could lead to greater regulatory oversight of SOL and SOL platforms, and there is the possibility that
law enforcement agencies could close SOL platforms or other SOL-related infrastructure with little or no notice and prevent users from
accessing or retrieving SOL held via such platforms or infrastructure.
As noted above, activities involving
SOL and other digital assets may fall within the jurisdiction of more than one financial regulator and various courts and such laws and
regulations are rapidly evolving and increasing in scope. The laws and regulations applicable to SOL and digital assets are evolving and
subject to interpretation and change.
Governments around the world
have reacted differently to digital assets; certain governments have deemed them illegal, and others have allowed their use and trade
without restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain and evolving
regulatory requirements.
As digital assets have grown
in both popularity and market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state agencies, including the
Financial Crimes Enforcement Network, the CFTC, the SEC, the Financial Industry Regulatory Authority, the Consumer Financial Protection
Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the Internal Revenue Service
and state financial regulators, have been examining the operations of digital asset networks, digital asset users and digital asset exchanges,
with particular focus on the extent to which digital assets can be used to violate state or federal laws, including to facilitate the
laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and the safety and soundness and consumer-protective
safeguards of exchanges or other service-providers that hold, transfer, trade or exchange digital assets for users. Many of these state
and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and
state agencies, and other countries have issued rules or guidance regarding the treatment of digital asset transactions and requirements
for businesses engaged in activities related to digital assets.
Available Information
Our corporate website is www.forwardindustries.com.
On our website under “Investors - SEC Filings,” we make available access to our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and amendments to those materials filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), free of charge. The Company also announces
material information to the public about the Company through a variety of means, including press releases and through its X (formerly
known as Twitter) account (@FWDind), in order to achieve broad, non-exclusionary distribution of information to the public and for complying
with its disclosure obligations under Regulation FD. Therefore, we encourage investors, the media and others interested in the Company
to review the information we make available on our website and our X account. The contents of the website and the Company’s X account
are not incorporated into this report.
ITEM 1A. RISK FACTORS
Investing in our common stock
involves a high degree of risk. You should carefully consider the following risk factors before deciding whether to purchase or sell stock
in the Company. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our
business operations or our financial condition. If any of the events discussed below occur, our business, consolidated financial condition,
results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common
stock could decline.
Summary Risk Factors
Our business is subject to numerous
risks and uncertainties that you should consider before investing in our common stock. Set forth below is a summary of the principal risks
we face:
Risks Related to the Company’s Digital Assets Strategy and Holdings
We purchase digital assets, including
SOL, the price of which has been, and will likely continue to be, highly volatile. Our operating results and share price may significantly
fluctuate, including due to the highly volatile nature of the price of such digital assets and erratic market movements.
We purchase or otherwise acquire
SOL for the establishment of our digital asset treasury operations. Digital assets, such as SOL, are highly volatile assets, as a result
of many factors including shifts in market sentiment, speculative trading, macroeconomic trends, technology-related disruptions and regulatory
announcements. In addition, digital assets do not pay interest or other returns, unless utilized in staking or financial applications,
and so the ability to generate a return on investment from the net proceeds of any capital raisings will principally depend on whether
there is appreciation in the value of digital assets following our purchases of digital assets with the net proceeds from such capital
raisings. Future fluctuations in digital asset trading prices may result in our converting digital assets into cash with a value substantially
below what we paid for such digital assets.
We adopted a digital asset treasury strategy
with a focus on SOL, and we may be unable to successfully implement this new strategy.
We adopted a digital asset treasury
primarily dedicated to SOL, including SOL acquisitions, staking and other decentralized finance activities. There is no assurance that
we will be able to successfully implement this new strategy or operate Solana-related activities at the scale or profitability currently
anticipated. Solana operates with a proof-of-stake combined with proof-of-history consensus mechanism, which differs significantly from
bitcoin’s proof-of-work mining mechanism. This strategic shift requires specialized employee skillsets and operational, technical
and compliance infrastructure to support SOL and related staking activities. This also requires that we implement different security protocols
and treasury management practices. Further, there is ongoing scrutiny and limited formal guidance from regulatory agencies, including
Nasdaq and the SEC, with respect to the treatment of public company cryptocurrency strategies. There is no assurance that we will be able
to execute this strategy by building out the needed infrastructure within the timeframe that we currently anticipate. Errors by key management
could result in significant loss of funds and reduced rewards. As a result, our shift towards SOL could have a material adverse effect
on our business and financial condition.
Our management relies upon the advice of the
Asset Manager through the Asset Management Agreement to assist in building our new Treasury Policy and the execution of the Company’s
Treasury Policy and may not yield the desired return.
We have engaged the Asset Manager
to manage our digital assets holdings and provide discretionary investment management services with respect to all of the Company’s
cash, cash equivalents, stablecoins, cryptocurrency and certain other investible assets (the “Treasury Assets”) including
all digital assets, the proceeds of any bona fide capital raise or other financing transaction conducted by or on behalf of the Company
or any of our subsidiaries and any investments of the Treasury Assets. Such Asset Manager (i) will have broad discretion in the application
of our Treasury Policy and management of our Treasury Assets, (ii) will have sole responsibility and authority with respect to the discretionary
investment management of the Treasury Assets and, (iii) from time to time direct the investment and reinvestment of our Treasury Assets.
The Asset Manager’s investments decisions and use of the Treasury Assets could not improve our results of operations or enhance
the value of our common stock. The failure to apply and manage these Treasury Assets effectively could result in financial losses that
could cause the price of our common stock to decline.
Our shift towards a Solana-focused strategy
requires substantial changes in our day-to-day operations and exposes us to significant operational risks.
Our shift towards a SOL treasury-focused
strategy, including staking, liquid staking, and other decentralized finance activities, exposes us to significant operational risks.
To participate in Solana’s Proof-of-Stake consensus mechanism, we must either operate or delegate to validator nodes, and such validator
nodes must keep software updated, maintain validator uptime and employ secure key management. In addition, the Solana ecosystem rapidly
evolves, with frequent upgrades and protocol changes that may require significant adjustments to our operational setup if we are operating
a validator node. The upgrades and protocol changes may require that we incur unanticipated costs and could cause temporary service disruptions
to the Solana network. We may also need to employ third-party service providers in our operations, which may introduce risks outside of
our control, including significant cybersecurity risks. Any of these operational risks could materially and adversely affect our ability
to execute our SOL treasury strategy and may prevent us from realizing positive returns and could severely hurt our financial condition.
The concentration of our SOL holdings enhances
the risks inherent in our Solana-focused strategy.
We have and intend to purchase
SOL and increase our overall holdings of SOL in the future. The intended concentration of our SOL holdings limits the risk mitigation
that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances
the risks inherent in our Solana-focused strategy. The price of SOL experienced a significant decline in 2022, and any similar future
significant declines in the price of SOL could have a more pronounced impact on our financial condition than if we used our cash to purchase
a more diverse portfolio of assets. Our initial purchases of SOL were valued at approximately $232 per SOL, or $1.58 billion in the aggregate,
in early September. At September 30, 2025, the fair value of our SOL holdings was approximately $209 per SOL, or $1.43 billion in the
aggregate, and at November 30, 2025, the fair value of our SOL holdings was approximately $133 per SOL, or $920.5 million in the aggregate.
Solana is created and transmitted through the
operations of the peer-to-peer Solana network, a decentralized network of computers running software following the Solana protocol. If
the Solana network is disrupted or encounters any unanticipated difficulties, the value of SOL could be negatively impacted.
If the Solana network is disrupted
or encounters any unanticipated difficulties, then the processing of transactions on the Solana network may be disrupted, which in turn
may prevent us from depositing or withdrawing SOL from our accounts with our custodian or otherwise affecting SOL transactions. Such disruptions
could include, for example: the insolvency, business failure, interruption, default, failure to perform, security breach, or other problems
of participants, custodians, or others; the closing of SOL trading platforms due to fraud, failures, security breaches or otherwise; or
network outages or congestion, power outages, or other problems or disruptions affecting the Solana network. In 2021 and 2022, the Solana
network experienced performance degradation including liveness disruptions due to network congestion; although the Solana network has
been upgraded to address those congestion issues, there is no assurance that future issues may not arise. The implementation of material
network upgrades, such as the proposed Alpenglow consensus upgrade or the continued integration of the Firedancer validator client, two
initiatives taking place on the Solana blockchain, could result in future degradation of performance. Any disruption of the Solana network
could materially impact the operation of decentralized finance on the network, resulting in the inability of the Company to transfer or
sell SOL, and the price of SOL.
SOL and other digital assets are novel assets,
and are subject to significant legal, commercial, regulatory and technical uncertainty, which could materially adversely affect the Company’s
financial position, operations and prospects.
SOL and other digital assets,
as well as applications on blockchain networks such as Solana, are relatively novel and are subject to significant uncertainty, which
could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets
and blockchain-based applications is unclear in certain respects, and it is possible that regulators in the United States or foreign countries
may interpret or apply existing laws and regulations in a manner that adversely affects the price of SOL or other digital assets, or the
ability of blockchain-based applications to operate.
The U.S. federal government,
states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement
or judicial actions, that could materially impact the price of SOL or the ability of individuals or institutions such as us to own or
transfer SOL and utilize blockchain-based applications on networks such as Solana. For example, the U.S. executive branch, the SEC, the
European Union’s Markets in Crypto Assets Regulation, among others, have been active in recent years, and in the United Kingdom,
the Financial Services and Markets Act 2023 became law. It is not possible to predict whether, or when, any of these developments will
lead to Congress granting additional authorities to the SEC, Commodity Futures Trading Commission (“CFTC”), or other regulators,
or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to
predict the nature of any such additional authorities, how additional legislation or regulatory oversight might impact the ability of
digital asset markets to function or the willingness of financial and other institutions to continue to provide services to the digital
assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and
SOL specifically. The consequences of increased regulation of digital assets and digital asset activities could adversely affect the market
price of SOL and in turn adversely affect the market price of our common stock.
Moreover, the risks of engaging
in a digital asset treasury strategy are relatively novel and have created, and could continue to create complications due to the lack
of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability
insurance or the potential inability to obtain such coverage on acceptable terms in the future.
The growth of the digital assets
industry in general, and the use and acceptance of SOL in particular, may also impact the price of SOL and is subject to a high degree
of uncertainty. The pace of worldwide growth in the adoption and use of the Solana network and SOL may depend, for instance, on public
familiarity with digital assets, ease of buying, accessing or gaining exposure to SOL, institutional demand for SOL as an investment asset,
the participation of traditional financial institutions in the digital assets industry, consumer demand for SOL as a means of payment,
and the availability and popularity of alternatives to SOL. Even if growth in SOL adoption occurs in the near or medium term, there is
no assurance that SOL and Solana network usage will continue to grow over the long term.
Because SOL have no physical
existence beyond the record of transactions on the Solana blockchain, a variety of technical factors related to the Solana blockchain
could also impact the price of SOL. For example, malicious attacks by validators, inadequate validation and staking rewards to incentivize
validating of Solana transactions, hard “forks” of the Solana blockchain into multiple blockchains, difficulties with upgrades
to the Solana network (such as the proposed Alpenglow consensus upgrade or integration of the Firedancer validator client) and advances
in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Solana blockchain and negatively affect
the price of SOL. The liquidity of SOL may also be reduced and damage to the public perception of Solana may occur, if financial institutions
were to deny or limit banking services to businesses that hold SOL, provide Solana-related services or accept SOL as payment, which could
also decrease the price of SOL. Similarly, the open-source nature of the Solana blockchain means the contributors and developers of the
Solana blockchain are generally not directly compensated for their contributions in maintaining and developing the blockchain, and any
failure to properly monitor and upgrade the Solana blockchain could adversely affect the Solana blockchain and negatively affect the price
of SOL.
The liquidity of SOL may also
be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading
venues to provide services for SOL and other digital assets.
In connection with our SOL treasury strategy,
we expect to interact with various smart contracts deployed on the Solana network, which may expose us to risks and technical vulnerabilities.
In connection with our SOL treasury
strategy, including staking, liquid staking, and other decentralized finance activities, we expect to interact with various smart contracts
deployed on the Solana network in order to optimize our strategy and generate income. Smart contracts are self-executing code that operate
without human intervention once deployed. Although smart contracts are integral to the functionality of staking deposit contracts, liquid
staking protocols, and decentralized finance applications, they are subject to many known risks such as technical vulnerabilities, coding
errors, security flaws, and exploits. Any vulnerability in a smart contract we interact with could result in the loss or theft of SOL
or other digital assets, which could have a materially adverse impact on our business. In addition, certain smart contracts are upgradable
or subject to certain governance controls which could result in unforeseen code errors, asset or account freezing, or the loss of digital
assets. A vulnerability in a smart contract could create an unintended and unforeseeable consequence that has adverse financial consequences,
such as the loss of or inability to access funds. There is no assurance that the smart contracts we integrate with or rely upon will function
as intended or remain secure. Exploitation of such vulnerabilities could have a material adverse effect on our business and financial
condition.
Part of our future business strategy may include
acquisitions and investments in companies with Solana-focused or blockchain strategies, and there are risks associated with the integration
of any assets or operations acquired and our ability to manage those risks. In addition, we may be unable to make attractive acquisitions
or successfully integrate acquired businesses, assets or properties, and any inability to do so may disrupt our business and hinder our
ability to grow.
We intend to pursue a strategy
focused on both SOL accumulation and future acquisitions. Accordingly, in the future we may make acquisitions of businesses or assets
that we expect to complement or expand our current assets. However, we may not be able to identify attractive acquisition opportunities
in the future. Even if we do identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on
commercially acceptable terms. No assurance can be given that we will be able to identify additional suitable acquisition opportunities,
negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets.
The success of any acquisition
will depend on our ability to integrate effectively the acquired business or asset into our existing operations. The process of integrating
acquired businesses and assets may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial
resources. The integration of acquisitions is a complex, costly and time-consuming process, and our management may face significant challenges
in such process. Some of the factors affecting integration will be outside of our control, and any one of them could result in increased
costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue.
Our failure to achieve consolidation
savings, to incorporate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational
difficulties could have a material and adverse effect on our financial condition and results of operations.
Additional ability to achieve
the objectives of our business strategy depends in significant part on our ability to obtain equity and debt financing. If we are unable
to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our business strategy.
Certain of the Sponsors and their affiliates
have been, and may continue to be, the subjects of legal and regulatory proceedings and investigations.
Certain of the Sponsors and their
affiliates have been, and may continue to be, the subjects of legal and regulatory proceedings and investigations. For example, Galaxy
Digital Inc. agreed to pay $200 million as part of an agreement with the New York Attorney General to resolve civil claims related to
certain investments, trading, and public statements made in connection with the LUNA digital asset from late 2020 to 2022. Separately,
Multicoin Capital Management, LLC and its managing partner Kyle Samani have been named as co-defendants along with Solana Labs in a putative
class-action litigation related to the promotion and sale of SOL for which a motion to dismiss is pending. Certain of these matters have
involved, among other things, allegations of improper marketing practices and misrepresentations, as well as unregistered securities offerings
with respect to SOL and other digital assets. Any adverse outcome in these proceedings or other future litigation or regulatory inquiries
could negatively affect public perception of the Sponsors, the Company, and Solana itself, which could constrain trading activity and
suppress the price and liquidity of SOL. Any such development could materially and adversely affect the value of our digital asset treasury,
the market price of our stock and our ability to execute on our digital asset treasury strategy.
Changes in regulatory interpretations could
require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.
The regulatory regime for digital
assets in the U.S. and elsewhere is uncertain. The Company may be unable to effectively react to proposed legislation and regulation of
digital assets, which could adversely affect its business.
If regulatory changes or interpretations
require us to register as a money services business with The Financial Crimes Enforcement Network (FinCEN) under the U.S. Bank Secrecy
Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements, resulting in significant compliance
costs and operational burdens. In such a case, we may incur extraordinary expenses to meet these requirements or, alternatively, may determine
that continued operations are not viable. If we decide to cease certain operations in response to new regulatory obligations, such actions