ITEM 7.MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS
The following discussion and
analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report
on Form 10-K. The following discussion and analysis compares our results of operations for the year ended September 30, 2025 (“Fiscal
2025”) with those for the year ended September 30, 2024 (“Fiscal 2024”). All dollar amounts and percentages presented
herein have been rounded to approximate values. In addition to historical information, this discussion and analysis contains forward-looking
statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors.”
Cautionary statement regarding Forward-Looking Statements
This report includes “forward-looking
statements”, as such term is used within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other
than historical factual information are forward-looking statements, including, without limitation, statements regarding future performance
and management’s plans and strategies for future operations, including the implementation and anticipated benefits of our digital
asset treasury strategy, intentions of our staking activities, our liquidity and the management of our liquidity, our beliefs regarding
SOL, the SOL blockchain and ecosystem, anticipated sales under the ATM offering or purchases under the share buyback program, anticipated
hirings, 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 report, 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. Forward-looking statements herein speak only as of the date of this report. 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
Forward Industries, Inc.
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.
New Digital Asset Treasury Strategy
On September 8, 2025, in connection
with a private placement with certain accredited investors, we announced the launch of our digital asset treasury strategy, pursuant to
which we plan to pursue a number of strategic initiatives to acquire SOL and other digital assets. On September 10, 2025, we entered into
the Asset Management Agreement and Services Agreement with Galaxy Digital Capital Management LP (“Galaxy Digital”) 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 SOL 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. Our strategy involves 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 approach involves acquiring SOL directly through
market purchases, 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 Treasury Policy,
and a significant portion of the balance sheet will be allocated to holding SOL and other digital assets in our digital asset treasury.
As of November 30, 2025, we estimated that our digital asset holdings comprised more than 90% of our total assets.
Reverse Stock Split
In June 2024, the Company’s
shareholders 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.
Discontinued Operations
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, 2025. As of September 30, 2025, the retail segment was fully discontinued, and we expect
to have no further significant involvement in this segment. The inventory of the retail segment was 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, 2025 and 2024. All information 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 the discontinued retail segment.
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 14).
Unless otherwise noted, amounts
related to these discontinued operations are excluded from the disclosures presented herein. See Note 3 for more information on these
discontinued operations.
Variability of Revenues and Results of Operations
A significant portion of our
design segment revenue is concentrated with several large customers, some of which are the same and some of which change over time. Orders
from some of these customers can be highly variable, with short lead times, which can cause our quarterly revenues, and consequently our
results of operations, to vary over a relatively short period of time.
Critical Accounting Estimates
Our financial statements have
been prepared in accordance with accounting principles generally accepted in the United States, which requires the use of certain estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Although we base our estimates on historical
experience and various other assumptions that we believe to be reasonable under the circumstances at the time of evaluation, changes in
our business strategy, adverse changes in market conditions or various other factors could cause actual results to differ from these estimates
and such differences could be significant.
We have identified the below
critical accounting estimates. An accounting estimate is considered critical if both: (a) the nature of the estimate or assumption is
material due to the levels of subjectivity and judgment involved, and (b) the impact of changes in the estimate and assumption has had
or is reasonably likely to have a material effect on the consolidated financial statements. This listing is not a comprehensive list of
all our accounting policies. For further information regarding the application of these and other accounting policies, see Note 2 of the
consolidated financial statements.
Goodwill and Intangible Assets
The Company reviews goodwill
for impairment at least annually, or more often if triggering events occur. The Company has two reporting units with goodwill (the IPS
and Kablooe operating segments) and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon
the occurrence of a triggering event. Evaluating goodwill for impairment will often require the estimation of the fair value of the underlying
reporting unit, the inputs to which require a significant amount of judgment, such as future cash flows, future growth rates and profitability.
Changes in our business strategy or adverse changes in market conditions could impact impairment analyses and require the recognition
of an impairment charge. Although we base our estimates on historical experience and various other assumptions that we believe to be reasonable
under the circumstances at the time of evaluation, actual results could differ from these estimates.
Intangible assets include trademarks
and customer relationships, which were acquired as part of the acquisitions of IPS in Fiscal 2018 and Kablooe in Fiscal 2020 and are amortized
over their estimated useful lives, which are periodically evaluated for reasonableness. Our intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate their carrying amount may not be recoverable. In assessing the recoverability of
our intangible assets, we must make estimates and assumptions regarding future cash flows and other factors to determine the fair value
of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized
and the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These
estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
Share-Based Compensation
We measure share-based compensation
expense related to employee and non-employee director share-based awards based on the estimated fair value of the awards as determined
on the date of grant, which is recognized as expense over the requisite service period. We utilize the Black-Scholes option pricing model
to estimate the fair value of stock options issued as compensation. The Black-Scholes model requires the input of highly subjective and
complex assumptions, including the expected term of the stock option, and the expected volatility of our common stock over the period
commensurate with the expected term of the option. Uncontrollable uncertainties, such as fluctuation in interest rates, can have an effect
on our Black-Scholes estimate calculations. Such fluctuations and other unforeseen changes in inputs could have a material impact on the
general and administrative expenses within our financial statements.
Recent Accounting Pronouncements
In December 2023, the Financial
Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, Intangibles - Goodwill
and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires
certain crypto assets meeting defined criteria to be measured at fair value each reporting period with changes in fair value recognized
in net income, presented separately from other intangible assets and accompanied by enhanced disclosures. This standard is effective for
fiscal years beginning after December 15, 2024, with early adoption permitted. The Company early adopted this standard in the fourth quarter
of Fiscal 2025, in conjunction with its new treasury strategy. Since the Company held no digital assets until September 2025, the adoption
of this standard had no impact to prior reported financial statements and no cumulative adjustment to retained earnings was required or
recorded.
In November 2024, the FASB issued
ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses” and in January 2025, the FASB issued ASU No. 2025-01, “Income Statement—Reporting
Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which clarified
the effective date of ASU 2024-03 for non-calendar year-end companies. ASU 2024-03 will require the Company to disclose the amounts of
purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense
captions in the consolidated statements of operations, as well as qualitatively describe remaining amounts included in those captions.
ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses. This ASU
is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 31, 2027.
The Company is currently evaluating the effects of the pronouncement on its consolidated financial statements.
In December 2023, the FASB issued
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 adopted this standard in Fiscal 2025 with no material impact to its consolidated
financial statements.
RESULTS OF OPERATIONS FOR FISCAL 2025 COMPARED
TO FISCAL 2024
The table below summarizes our consolidated results
from continuing operations for Fiscal 2025 as compared to Fiscal 2024:
Fiscal 2025 Fiscal 2024 Change ($) Change (%)
n/m - not meaningful
The decline in net revenues from
Fiscal 2024 to Fiscal 2025 resulted from a $6,385,000 decline in design segment revenue, primarily attributable to the loss of a major
design customer in December 2024 and a net decrease in volume of work and projects with other customers, partially offset by $4,582,000
in staking revenue generated by our digital assets segment.
Our gross profit increased slightly,
and gross margin increased from 25.9% in Fiscal 2024 to 28.5% in Fiscal 2025. This increase in both gross profit and margin resulted from
the high margin staking revenue generated in our digital assets segment, which generated gross profit of $4,412,000 and gross margin of
96.3%. This was partially offset by lower gross profit and margin in the design segment, a decrease of $4,405,000 in gross profit and
a reduction in gross margin from 25.9% in Fiscal 2024 to 5.7% in Fiscal 2025, driven by lower utilization rates, partially mitigated by
staff reductions in January and June 2025.
Sales and marketing expenses
increased primarily due to increased corporate marketing spend of $500,000 related to corporate market research related activities and
was partially offset by a $240,000 reduction in the design segment, driven by cost reduction efforts, including lower personnel costs
and lower marketing spend.
Corporate general and administrative
expenses increased $4,392,000 due to higher share-based compensation, professional fees related to the sale of the OEM segment and our
recent financing transactions, costs associated with additional shareholder meetings and higher investor relations spending. Design segment
expenses decreased $769,000 due to lower personnel costs related to staff reductions and other cost-cutting measures in response to the
decline in revenues. Digital assets general and administrative expenses of $539,000 are asset management fees to Galaxy Digital. 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 2025, the Company
recorded goodwill impairment charges of $1,167,000 related to the IPS reporting unit and $391,000 related to the Kablooe reporting unit,
and intangible asset impairment charges of $271,000 related to the IPS reporting unit and $197,000 related to the Kablooe reporting unit,
all of which are included in the design segment. These impairment charges resulted from recurring impairment testing and were driven by
historical losses and a reduction in expected future performance of the reporting units.
The change in other expense/(income),
net is due to a $160,035,000 reduction in the fair value of our digital assets resulting from a decline in the market value of SOL, a
$658,000 increase in the estimated fair value of the warrant liability from July 1, 2025 through August 8, 2025 based on changes in the
inputs to the valuation model, and lower interest income, interest expense and foreign currency exchange rate losses.
In Fiscal 2025, we recorded a
tax provision of $20,000, incurred a loss from continuing operations before income taxes of $169,069,000 and had an effective tax rate
of 0%. In Fiscal 2024, we recorded a tax provision of $23,000, generated a loss from continuing operations before income taxes of $2,143,000
and had an effective tax rate of (1.3%). We maintain significant net operating loss carryforwards and do not recognize a significant income
tax provision or benefit as our deferred tax provision is typically offset by a full valuation allowance on our net deferred tax assets.
Consolidated basic and diluted
loss per share from continuing operations was $24.90 and $1.97 for Fiscal 2025 and Fiscal 2024, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Prior to our recent financings,
our primary source of liquidity has been our operations. The primary demand on our working capital is and has historically been (i) operating
losses, (ii) repayment of debt obligations, and (iii) any increases in accounts receivable and inventories arising in the ordinary course
of business. Historically, our sources of liquidity have been adequate to satisfy working capital requirements arising in the ordinary
course of business and we anticipate that our liquidity and financial resources will remain adequate to manage our operating and financial
requirements until at least December 2026. At September 30, 2025, our working capital was approximately $38.5 million. At November 30,
2025, our cash balance was approximately $41.2 million.
Recent Financings
On September 9, 2025, we sold
and issued to certain accredited investors in a private placement an aggregate of: (i) 77,144,562 shares of our common stock at an offering
price of $18.50 per share, and (ii) pre-funded warrants to purchase 12,031,364 shares of our common stock with $18.49999 of the exercise
price pre-funded at closing. Pre-funded warrants to purchase an additional 1,783,519 shares of our common stock with $18.49999 of the
exercise price pre-funded were also issued in connection with a related strategic advisor agreement. We received aggregate proceeds of
approximately $1.65 billion, before deducting placement agent fees and other offering expenses. Net proceeds to the Company, after deducting
placement agent fees and other offering expenses, were approximately $1.58 billion.
From July 1 through August 12,
2025, we sold 246,000 shares of common stock under the $35 million ELOC and received gross proceeds of $2,432,000 in connection with such
sales. We have sold all shares registered under the ELOC, which was mutually terminated on September 9, 2025.
On August 11, 2025, we sold,
in a registered direct offering, approximately 263,000 shares of our common stock at a price of $8.50 per share to six investors and received
gross proceeds of approximately $2,230,000.
From September 17, 2025 through
November 30, 2025, we sold 436,000 shares of our common stock under our Controlled Equity Offering Sales Agreement for gross proceeds
of approximately $11.7 million.
On September 11, 2025, in connection
with a Waiver and Leak-out Agreement, we sold 1,784,000 shares of our common stock to the Series B Investors for gross proceeds of $33
million.
See Note 8 to our consolidated
financial statements for more information about each of these financings.
Other Liquidity Factors
In the prior reporting period,
we identified certain conditions that raised substantial doubt about our ability to continue as a going concern. These conditions included
the loss of a significant customer, the resulting decline in revenues and cash, and recurring operating losses. During the period from
May 2025 to September 2025, the Company raised gross proceeds of over $1.65 billion through the multiple equity financing transactions
described above. Management has evaluated the Company’s ability to continue as a going concern and has concluded that the Company
now has sufficient liquidity to fund anticipated cash requirements for operations and working capital purposes for at least one year from
the date of issuance of these financial statements. As a result, substantial doubt about the Company’s ability to continue as a
going concern no longer exists.
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.
Cash Flows
During Fiscal 2025 and Fiscal
2024, our sources and uses of cash were as follows:
Operating Activities
During Fiscal 2025, cash used
in operating activities of $4,502,000 resulted from the net loss of $166,974,000, non-cash net digital asset revenue of $4,412,000, the
$1,406,000 gain on sale of the OEM business, and the net change in other operating assets and liabilities of $120,000, partially offset
by non-cash charges of $160,035,000 related to the fair value adjustment to digital assets, non-cash charges of $3,309,000 for depreciation,
amortization, share-based compensation and credit loss expense, non-cash charges of $658,000 related to the fair value adjustment to the
warrant liability, non-cash charges of $2,026,000 for the impairment of goodwill and intangible assets, a $1,153,000 increase in accounts
payable and related party payables, an $833,000 decrease in accounts receivable and contract assets and $396,000 cash provided by discontinued
operations.
During Fiscal 2024, cash provided
by operating activities of $520,000 resulted from a net decrease in accounts receivable and contract assets of $1,224,000, cash provided
by discontinued operations of $1,672,000, non-cash charges for depreciation, amortization, share-based compensation, credit loss expense
and goodwill impairment of $653,000 and the net change in other operating assets and liabilities of $53,000, partially offset by the net
loss of $1,951,000, a decrease in accrued expenses and other current liabilities $739,000, a decrease in accounts payable $392,000.
Investing Activities
In Fiscal 2025 cash used for
investing activities included $900,791,000 used to purchase digital assets, $650,000 in payments related to the sale of the OEM business,
and $26,000 used to purchase property and equipment. In Fiscal 2024, cash used for investing activities of $65,000 resulted from purchases
of property and equipment.
Financing Activities
In Fiscal 2025, the Company generated
$900,104,000 in cash from the sale of shares under our securities purchase agreement and related pre-funded warrants, $33,000,000 from
the Series B waiver and leak-out agreement, $3,962,000 from our ATM, $2,361,000 from our Equity Line of Credit, $2,238,000 from our registered
direct offering, $971,000 from the issuance of the Series B preferred stock, net of fees, and $61,000 related to the exercise of stock
options, which was partially offset by $737,000 of deferred financing costs related to the ATM and $600,000 to pay off the remaining balance
of our note payable to Forward China.
In Fiscal 2024, cash used in
financing activities of $500,000 consisted of principal payments on the promissory note held by Forward China.
ITEM 7A.QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8.FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements
and notes thereto included in this Annual Report may be found beginning on page F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management carried out an
evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure
controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer
and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).
Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated
the effectiveness of our internal control over financial reporting as of the end of the period covered by this report. In making this
assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control-Integrated Framework as issued in 2013. Based on that evaluation, our management concluded that our internal control
over financial reporting as of September 30, 2025, was effective based on that criteria.
Our internal control over financial
reporting is a process designed under the supervision of our Principal Executive Officer and Principal Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes
in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the consolidated financial statements.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate.
Changes in Internal Control
During the fourth quarter
of Fiscal 2025, we began the implementation of our new digital assets treasury policy, as further described in Notes 1 and
6 to the consolidated financial statements and accordingly have implemented new and additional internal controls
surrounding the acquisition, safeguarding, custody, accounting and reporting of our digital assets. We continue to implement and
enhance policies, processes, people, technology and operations related to our new treasury strategy and will continue to evaluate
the impact of any related changes to internal controls over financial reporting in Fiscal 2026. Other than the
changes related to our new treasury strategy described above, there were no changes in our internal control over financial reporting
identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fourth quarter
of Fiscal 2025 that materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Report of Independent Registered Public Accounting
Firm
Because we are a smaller reporting
company, this Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the three months ended
September 30, 2025, no director or officer of the company adopted, modified or terminated a “Rule 10b5-1 trading
arrangement” or “non-rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The information required by this
item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Shareholders to be filed with the SEC
within 120 days of the fiscal year ended September 30, 2025.
Code of Business Conduct and Ethics
Our Board of Directors has adopted
a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which is available on our website (www.forwardindustries.com)
under “Investors – Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding
amendment to, or waiver from, a provision of our Code of Conduct and by posting such information on the website address and location specified
above.
Insider Trading Arrangements and Policies
The Company has an insider trading
policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all Company personnel, including
directors, officers, employees, and other covered persons, and the Company itself. The Company believes that its insider trading policy
is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A
copy of the Company’s insider trading policy is filed as Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal year ended
September 30, 2024
ITEM 11. EXECUTIVE COMPENSATION
The information required by
this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Shareholders to be filed
with the SEC within 120 days of the fiscal year ended September 30, 2025.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The information required by this
item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Shareholders to be filed with the SEC
within 120 days of the fiscal year ended September 30, 2025.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this
item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Shareholders to be filed with the SEC
within 120 days of the fiscal year ended September 30, 2025.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this
item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Shareholders to be filed with the SEC
within 120 days of the fiscal year ended September 30, 2025.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of the report.
(3) Exhibits. See the Exhibit Index.
ITEM 16. FORM 10-K SUMMARY
Not Applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: December 11, 2025
FORWARD INDUSTRIES, INC.
In accordance with the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
December 11, 2025 /s/ Pyahm (Kyle) Samani
Pyahm (Kyle) Samani
Chairman of the Board of Directors
December 11, 2025 /s/ Sangita Shah Sangita Shah Director
December 11, 2025 /s/ Keith Johnson
Keith Johnson Director
EXHIBIT INDEX
Incorporated by Reference
Exhibit No. Exhibit Description Form Date Number Filed or Furnished Herewith
3.1 Restated Certificate of Incorporation 10-K 12/8/10 3(i)
3.10(a) Amendment No. 1 to the Third Amended and Restated Bylaws 8-K 6/18/25 3.1
4.3 Form of Pre-Funded Warrant– PIPE Offering 8-K 9/8/25 4.1
10.7 Summary of Employment Arrangement - Terence Wise* 10-K 12/21/23 10.4
10.32 Form of Waiver and Leak-Out Agreement – Series B Holders 8-K 9/8/25 10.5
21.1 List of Subsidiaries Filed
23.1 Consent of Independent Registered Public Accounting Firm CBIZ CPAs PC Filed
31.1 CEO Certification (302) Filed
31.2 CFO Certification (302) Filed
32.1 CEO and CFO Certifications (906) Furnished
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed
______________________
* Management compensatory agreement or arrangement.
+ Certain schedules, appendices and exhibits to this agreement
have been omitted in accordance with Item 601 of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally
to the Securities and Exchange Commission staff upon request.
Copies of this filing (including the financial statements) and any of the
exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Forward Industries, Inc. 700
Veterans Memorial Hwy, Suite 100, Hauppauge, NY 11788; Attention: Corporate Secretary.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets at September 30, 2025 and 2024 F-5
Notes to Consolidated Financial Statements F-9
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Forward Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Forward Industries, Inc. (the “Company”) as of September 30, 2025, the related consolidated statements of
operations, shareholders’ equity and cash flows for the year ended September 30, 2025, and the related notes (collectively referred
to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material
respects, the financial position of the Company as of September 30, 2025, and the results of its operations and its cash flows for the
year ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Retrospective Application of a Change in Accounting
Principle
We also have audited the adjustments to the September
30, 2024 financial statements to retrospectively apply the change in accounting principle due to the adoption of Accounting Standards
Update 2023-07, Segment Reporting, as described in Note 16. In our opinion, such adjustments are appropriate and have been properly applied.
We were not engaged to audit, review, or apply any procedures to the September 30, 2024 financial statements of the Company other than
with respect to the adjustments and, accordingly, we do not express an opinion or any form of assurance on the September 30, 2024 financial
statements taken as a whole.
Emphasis of Matter - Investment in SOL
In forming our opinion, we have considered the
adequacy of the disclosure in Note 17, "Risks and Uncertainties," to the consolidated financial statements, which describes
the significant risks and uncertainties that could materially affect the Company’s financial condition, and results of operations.
As discussed in Note 17, the Company holds a substantial concentration in SOL, a digital asset that is subject to high market volatility
and speculative trading, regulatory uncertainties, cybersecurity threats, and risks related to its custody and legal status. These factors
may result in material adverse effects, including potential losses, increased variability in earnings, and exposure to additional regulatory
requirements and operational disruptions.
Emphasis of Matter - Discontinued Operations
As discussed in Note 3 to the financial statements,
the Company committed to a plan to dispose of its OEM segment, which met the criteria for discontinued operations under ASC 250-20. Accordingly,
we have audited the presentation of the OEM segment as discontinued operations as described in Note 3 for the September 30, 2024 financial
statements and in our opinion, such adjustments are appropriately and have been properly applied. We were not engaged to audit, review,
or apply any procedures to the September 30, 2024 financial statements of the Company other than with respect to the adjustments and,
accordingly, we do not express an opinion or any form of assurance on the September 30, 2024 financial statements taken as a whole.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below
are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of audit evidence pertaining to
the existence and control of the digital assets
We identified the evaluation of audit evidence
pertaining to the existence of the digital assets and whether the Company controls the digital assets as a critical audit matter. The
principal considerations for our determination of the critical audit matter is as the result of especially subjective auditor judgment
was involved in determining the nature and extent of evidence required to assess the existence of the digital assets and whether the Company
controls the digital assets, as control over the digital assets is provided through private cryptographic keys stored using third-party
custodial service.
The following are the primary procedures we performed
to address this critical audit matter. We evaluated the design and implementation of certain internal controls over the digital assets
process, including a control over the comparison of the Company’s records of digital assets held to the custodial records. We performed
micro-movement testing on the wallets held by the Company as well as performed procedures on the micro movements on unstaking and staking
of wallet balances. We obtained confirmation of the Company’s digital assets in custody as of September 30, 2025 and compared the
total digital assets confirmed to the Company’s record of digital asset holdings. We also compared the Company’s record of
digital asset transactions to the records on the public blockchain using a software audit tool. We applied auditor judgment in determining
the nature and extent of audit evidence required, especially related to assessing the existence of the digital assets and whether the
Company controls the digital assets. We evaluated the sufficiency and appropriateness of audit evidence obtained by assessing the results
of procedures performed over the digital assets.
/s/ CBIZ CPAs P.C.
CBIZ CPAs P.C.
We have served as the Company’s auditor
since March 2025.
Melville,
New York
December 11, 2025
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Forward Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Forward Industries, Inc. and Subsidiaries (the “Company”) as of September 30, 2024, and the related consolidated
statements of operations, shareholders’ equity and cash flows for the year then ended, and the related notes (collectively referred
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide
a reasonable basis for our opinion.
/s/ CohnReznick LLP
We have served as the Company’s auditor
from 2011 to 2025.
Holmdel, New Jersey
December 27, 2024
except for the presentation of the OEM segment
as discontinued operations as described in Notes 1, 2, and 3, as to which the date is September 16, 2025 and the presentation of the
Fiscal 2024 Design Segment in Note 16, as to which the date is December 11, 2025.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, September 30,
Assets
Current assets:
Intangible assets, net – 680,386
Liabilities and shareholders' equity
Current liabilities:
Note payable to Forward China (related party) $ – $ 600,000
Related party payables (Note 14) 923,513 –
Accrued expenses and other current liabilities 623,512 571,662
Liabilities held for sale – 7,292,858
Other liabilities:
Commitments and contingencies (Note 12) – –
Shareholders' equity:
The accompanying notes are an integral part of the consolidated financial statements.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended September 30,
Related party expenses 923,513 –
Loss on change in fair value of digital assets 160,035,105 –
Loss on change in fair value of warrant liability 658,332 –
Deemed dividend on Series B Convertible Preferred Stock (29,444 ) –
Basic loss per share :
Basic loss per share from continuing operations $ (24.90 ) $ (1.97 )
Basic earnings per share from discontinued operations 0.31 0.20
Basic loss per share $ (24.59 ) $ (1.77 )
Diluted loss per share:
Diluted loss per share from continuing operations $ (24.90 ) $ (1.97 )
Diluted earnings per share from discontinued operations 0.31 0.20
Diluted loss per share $ (24.59 ) $ (1.77 )
Weighted average common shares outstanding:
The accompanying notes are an integral part of the consolidated financial statements.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Fiscal Year Ended September 30, 2025
Series A-1 Convertible Series B Convertible Additional
Preferred Stock Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total
Reclassification of warrant liability – – – – – – 1,221,443 – 1,221,443
For the Fiscal Year Ended September 30, 2024
Series A-1 Convertible Series B Convertible Additional
Preferred Stock Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total
The accompanying notes are an integral part of the consolidated financial statements.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended September 30,
Operating Activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash digital asset revenue, net (4,411,859 ) –
Change in fair value of digital assets 160,035,105 –
Change in fair value of warrant liability 658,332 –
Gain on sale of OEM segment (1,405,972 ) –
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 27,284 (60,851 )
Related party payables 923,513 –
Net changes in operating lease liabilities 582 12,161