Forward Industries, Inc 10-Q for FY2026 Q2
Forward Industries, Inc. (FWDI)
About this 10-Q
Forward Industries, Inc filed this 10-Q on May 14, 2026, covering the quarter ended March 31, 2026 (FY2026 Q2).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $12.96M
- up 315.0% from $3.12M a year earlier
- Net loss
- $283.08M
- compared with a net loss of $1.45M a year earlier
- Diluted EPS
- -$2.98
- compared with -$1.32 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Office) (Zip Code)
(
(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 |
|
The (The Nasdaq Capital Market) |
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.
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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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.
| Large accelerated filer ¨ | Accelerated filer ¨ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark 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 is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes o No
There were shares of the registrant’s common stock outstanding as of April 30, 2026.
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
| ITEM 1 | FINANCIAL STATEMENTS |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | September 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (See Note 2) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable,
net of allowances for credit losses of $ |
||||||||
| Contract assets | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Digital assets | ||||||||
| Digital assets - restricted | ||||||||
| Digital assets pledged as collateral with related party | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Loans payable - related party | $ | $ | ||||||
| Loans payable - digital assets | ||||||||
| Accounts payable | ||||||||
| Accounts payable - related party | ||||||||
| Deferred income | ||||||||
| Current portion of operating lease liability | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Other liabilities: | ||||||||
| Operating lease liability, less current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 9 and 10) | ||||||||
| Shareholders' equity: | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding, respectively, at March 31, 2026; shares issued and outstanding at September 30, 2025 | ||||||||
| Treasury Stock, at cost, and shares at March 31, 2026 and September 30, 2025, respectively | ( |
) | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders' equity | ||||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 3 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended March 31, | For the Six Months
Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| General and administrative expenses - related party | ||||||||||||||||
| Loss on digital assets | ||||||||||||||||
| Impairment of digital assets | ||||||||||||||||
| Derivative gain, net | ( | ) | ( | ) | ||||||||||||
| Goodwill impairment | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income - related party | ( | ) | ( | ) | ||||||||||||
| Interest expense - related party | ||||||||||||||||
| Other expense, net | ||||||||||||||||
| Loss from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Benefit from) / provision for income taxes | ( | ) | ||||||||||||||
| Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income from discontinued operations, net of tax | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic (loss)/earnings per share : | ||||||||||||||||
| Basic loss per share from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic earnings per share from discontinued operations | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted (loss)/earnings per share: | ||||||||||||||||
| Diluted loss per share from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted earnings per share from discontinued operations | ||||||||||||||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
| For the Six Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||
| Series A-1 Convertible | Additional | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury Stock | Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | |||||||||||||||||||||||||||||||||
| Proceeds from ATM, net | – | – | ||||||||||||||||||||||||||||||||||
| Proceeds from stock options exercised | – | – | ||||||||||||||||||||||||||||||||||
| Share repurchases | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Fees related to Securities Purchase Agreement | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at December 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | |||||||||||||||||||||||||||||||||
| Proceeds from stock options exercised | – | – | ||||||||||||||||||||||||||||||||||
| Share repurchases | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Exercise of Pre-Funded Warrants | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| For the Six Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||
| Series A-1 Convertible | Additional | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury Stock | Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | |||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | |||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Preferred stock issued in connection with conversion of accounts payable to Forward China | |
– | – | |||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 5 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Credit loss expense | ||||||||
| Loss on digital assets | ||||||||
| Impairment of digital assets | ||||||||
| Non-cash digital asset revenue, net | ( | ) | ||||||
| Goodwill impairment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable-related party | ( | ) | ||||||
| Deferred income | ( | ) | ||||||
| Net changes in operating lease liabilities | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash used in operating activities-continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities-discontinued operations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of digital assets | ( | ) | ||||||
| Sales of digital assets | ||||||||
| Net cash provided by / (used in) investing activities | ( | ) | ||||||
| Financing Activities: | ||||||||
| Fees associated with Securities Purchase Agreement | ( | ) | ||||||
| Proceeds from ATM, net | ||||||||
| Proceeds from loans payable-related party | ||||||||
| Proceeds from stock options exercised | ||||||||
| Treasury stock purchases | ( | ) | ||||||
| Exercise of pre-funded warrants | ||||||||
| Deferred financing costs associated with ATM | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||||||||
| Operating lease assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Conversion of accounts payable to convertible preferred stock | $ | $ | ||||||
| Digital assets pledged as collateral | $ | $ | ||||||
| Digital assets received in exchange for loan payable | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 6 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 1 | OVERVIEW |
Background and Nature of Business
Forward Industries, Inc. (“Forward”, “we”, “our” or the “Company”) is a Solana (“SOL”) focused digital asset treasury company, with the strategy to buy, hold, stake, trade, invest in, and grow SOL and SOL related digital assets, protocols and businesses. Our mission is to expand and strengthen the Solana ecosystem by acquiring and staking SOL and engaging with, providing tools to and investing in the Solana protocol, Solana developers and Solana related projects in order to increase shareholder value. In connection with a private placement transaction in September 2025, we launched our digital asset treasury strategy, which we have been executing to date by holding SOL, staking SOL, operating a SOL validator, engaging in the SOL decentralized finance (“DeFi”) ecosystem and actively repurchasing shares of our common stock.
Under our new treasury policy and strategy, the principal holding in our treasury reserve on the balance sheet will be allocated to digital assets, primarily SOL, fwdSOL (a Liquid Staking Token, or “LST”, developed by the Company in collaboration with Socean Labs Inc., doing business as Sanctum, on the Solana blockchain) and similar assets.
Our planned approach involves acquiring SOL, staking our holdings via our own validator, deploying SOL into various DeFi protocols to earn yield, fees or rewards, lending SOL to earn interest, pledging SOL as collateral to borrow other assets and generating revenue through strategic acquisitions, partnerships and deployments within the Solana ecosystem.
Forward also operates an engineering services business, which provides hardware and software product design and engineering services to customers predominantly located in the U.S.
Discontinued Operations
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 prior period 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 former related party owned by the Company’s former CEO (see Note 8).
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.
Liquidity
The
accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which
contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. The Company
had an accumulated deficit of $ and a negative working capital of $
Based on our forecasted cash flows, we believe our existing cash balance, digital asset holdings, and access to our ATM facility will be sufficient to meet our liquidity needs through at least May 2027.
| 7 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 2 | ACCOUNTING POLICIES |
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and all of 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”). In May 2025, the Company sold all of its equity interests in Forward Switzerland and Forward UK. As a result, our operating results for the three and six months ended March 31, 2026 do not include operating results of either of these entities. The terms “Forward”, “we”, “our” or the “Company” as used throughout this document are used to indicate Forward Industries, Inc. and all of its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
In March 2026, the Company’s shareholders approved a proposal to change the Company’s state of incorporation from New York to Texas. This reincorporation was carried out by means of merger of Forward with and into a wholly-owned Texas subsidiary.
In the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein but are not necessarily indicative of the results of operations for the year ending September 30, 2026. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and with the disclosures and risk factors presented therein. The September 30, 2025 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.
Accounting Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. Within this report, certain dollar amounts and percentages have been rounded to their approximate values.
Segment Reporting
As a result of the Company’s digital asset treasury strategy and the OEM Plan, the Company now has reportable segments: digital assets and design. The digital assets segment captures SOL-based yield generated by participating in the Solana network’s staking protocol, which currently comprises rewards received from native staking. The design segment consists of operating segments (IPS and Kablooe, which have been aggregated into one reportable segment) that provide a full spectrum of hardware and software product design and engineering services to customers predominantly located in the U.S. See Note 5 for additional information on our segments.
Digital Assets
The Company accounts for its holdings of digital assets, including cryptocurrencies such as Solana, as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350-60, “Intangibles – Goodwill and Other – Crypto Assets (“ASC 350-60”). Digital assets under ASC 350-60 are initially measured at cost and subsequently measured at fair value, with changes in fair value recognized in net income/(loss) each reporting period. Digital assets are classified as current assets if the Company intends to sell them or otherwise realize their value within twelve months after the reporting date, or as noncurrent assets if the Company intends to hold them for longer than twelve months. The Company evaluates its intent and ability to hold digital assets at each reporting date. Upon disposal of a digital asset (e.g., by sale, exchange or transfer) the Company derecognizes the asset and recognizes a realized gain or loss in net income/(loss), calculated as the difference between the sale proceeds and the asset’s carrying amount, which is determined using a first in-first out method.
| 8 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Digital assets that are not in scope of ASC 350-60, primarily wrapped tokens that provide the holder with an enforceable right to redeem the underlying digital assets, such as fwdSOL, are accounted for as indefinite-lived intangible assets subject to impairment testing, or as financial assets if they are redeemable for cash. These digital assets are accounted for as intangible assets and measured at the lower of cost or market value. The Company determines market value using the lowest observed transaction price of the asset during the holding period. The Company elected to apply the fair value option to digital assets that meet the definition of financial assets.
The Company has developed fwdSOL, a Liquid Staking Token (“LST”) in collaboration with Socean Labs Inc. on the Solana blockchain. fwdSOL allows Forward and other SOL holders to stake native SOL and continue earning staking rewards while receiving and using fwdSOL elsewhere in the Solana ecosystem. fwdSOL is backed by SOL staked on Forward Industries' institutional grade validator infrastructure which automatically accrues staking rewards.
Digital Asset Loan Receivable and Payable
The Company engages in digital asset lending and borrowing activities. Digital asset loans receivable are typically fixed short-term loans or loans with no specified maturity dates that are callable or prepayable with a short notice period and no penalties. The borrower has the ability to use the loaned digital assets at its discretion for the duration of the loan. The Company derecognizes the underlying digital assets upon loan origination and recognizes a digital asset loan receivable that represents the Company’s right to receive the loaned digital asset upon settlement of the loan. The digital asset loan receivable is measured at the fair value of the underlying digital assets that the Company expects to receive under the arrangement. The Company evaluates its digital asset loan receivables for possible credit losses using the current expected credit loss framework outlined in ASC Topic 326, “Financial Instruments—Credit Losses”, (“ASC 326”). Digital asset loan interest is denominated in the same underlying digital asset that is loaned out. The Company recognizes interest income over the life of the loan using the effective rate method.
The Company also borrows digital assets from counterparties. As borrower, the Company has the ability to use the borrowed digital assets at its discretion. The Company pays interest on borrowed digital assets that is denominated in the borrowed digital assets and recognizes interest expense over the term of the loan. The borrowed digital assets are recognized as digital assets in accordance with the Company’s accounting policies for digital assets. The obligation to repay digital assets in the future is recorded as a Loan Payable - Digital Assets and is remeasured at fair value.
The Company may pledge or receive digital assets as collateral associated with its digital asset lending and borrowing activities. The Company evaluates the nature of the arrangement with counterparties to determine whether it obtains or loses control of the collateral assets. Where control of the collateral assets transfers to or from the Company, it is accounted for in the same manner as digital asset loans receivable or payable.
Accounts Receivable
Accounts receivable consists
of unsecured trade accounts with customers net of an allowance for credit losses. Collectability of accounts receivable is estimated by
evaluating the number of days accounts are outstanding, customer payment history, recent payment trends and perceived creditworthiness,
adjusted as necessary based on specific customer situations. At March 31, 2026, September 30, 2025 and September 30, 2024, the Company
had allowances for credit losses of $
Derivatives
The Company may enter into over-the-counter (“OTC”) derivative contracts, including written options referencing the price of digital assets such as SOL. These contracts are accounted for in accordance with ASC 815, “Derivatives and Hedging.” Derivative instruments are recognized on the balance sheet at fair value on the trade date and are subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings within “Derivative gain/(loss).” The Company does not designate any derivative instruments as hedging instruments under ASC 815.
| 9 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Written options represent obligations of the Company and are recorded as derivative liabilities. The Company receives an upfront premium at inception, which generally represents the initial fair value of the written option unless model-derived fair value indicates otherwise. Derivative instruments are derecognized upon expiration or settlement.
Treasury Stock
The Company accounts for
treasury stock using the cost method. As of March 31, 2026 and September 30, 2025, the Company held and shares of its common
stock in treasury, purchased at a total cost of $ and $
Revenue Recognition
Digital Asset Staking
The Company participates in proof-of-stake validation. Proof-of-stake validation, also referred to as staking, requires the Company to delegate its digital assets to a validator. Staking can be performed on proprietary validation infrastructure or through the use of third-party infrastructure or service providers. The Company concluded that where it controls the validation infrastructure, it is a principal in the provision of staking services to the blockchain and recognizes staking revenue on a gross basis. Blockchain rewards distributed to third parties staking on the Company’s validation infrastructure are included in cost of sales.
The Company recognizes noncash consideration from staking activities related to its digital asset holdings in accordance with ASC 606, “Revenue from Contracts with Customers”. Staking income is generated when the Company participates in digital asset networks to validate transactions and, in return, earns rewards in the form of additional digital assets. The Company considers its performance obligation to be satisfied at the point in time when it has successfully provided validation services to the network and the reward is determinable and collectible. Revenue is measured as the fair value of digital assets received as staking rewards at contract inception, which occurs at the beginning of each epoch of the respective blockchain.
Design Segment
The Company applies the “cost to cost” and “right to invoice” methods of revenue recognition to the contracts with customers in the design segment. The design segment typically engages in two types of contracts: (i) time and material and (ii) fixed price. The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method. Revenues from fixed price contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations, or the “cost to cost” method. Revenues from fixed price contracts that contain specific deliverables are recognized when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted.
Recognized revenues that
will not be billed until a later date are recorded as contract assets in the accompanying condensed consolidated balance sheets. The design
segment had contract assets of $
Disaggregation of Revenue
Digital assets staking revenue is recognized at a point in time. Design segment revenue is predominantly recognized over time and has similar other economic factors, including, but not limited to, the geographic location and type of customer, payment terms and length of contracts. See Note 5 for disaggregated revenue amounts.
| 10 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
The Company recognizes future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards (“NOLs”) to the extent that realization of these benefits is more likely than not. At March 31, 2026, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets as it is not probable that such deferred tax assets will be realized.
Utilization of NOLs may be subject to substantial limitation under Section 382 of the Internal Revenue Code of 1986, due to ownership change limitations that have occurred previously or could occur in the future, which may limit the amount of NOLs that can be used to offset future taxable income. Similar rules may apply under state tax laws. The Company engaged external tax experts to perform a comprehensive Section 382 study, which was completed in April 2026. The results of this study concluded an ownership change took place in connection with the Company’s private placement transaction in September 2025, which limits the amount of NOLs the Company can use each year. Our tax provision for the three months ended December 31, 2025 was estimated without the benefit of NOLs as the 382 tax study had not been completed at the time we filed our financial statements for such period. Our tax provision for the three months ended March 31, 2026 was estimated with the benefit of those NOLs that could be utilized as a result of the 382 tax study and included an adjustment to the first quarter tax provision to reflect their inclusion.
Our income tax (benefit)
provision for the three and six months ended March 31, 2026 resulted from taxable income for which NOLs were not available to offset due
to the Section 382 limitations described above. For the three and six months ended March 31, 2025, we reported no income tax provision
or benefit due to the existence of significant net operating loss carryforwards. Our effective tax rate was
Fair Value Measurements
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset's or liability's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:
| · | Level 1: quoted prices in active markets for identical assets or liabilities; |
| · | Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or |
| · | Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. |
Digital Assets
The Company applies ASC 820 in the valuation of SOL held by the Company and digital assets pledged as collateral for financial statement purposes. The fair value of SOL uses Level 1 inputs to reflect the price that would be received for SOL in a current sale, which assumes an orderly transaction between market participants on the measurement date in SOL’s “principal market,” or in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Company determines its principal market (or in the absence of a principal market, the most advantageous market) on a periodic basis to determine which market is its principal market for the purpose of calculating fair value for the creation of quarterly and annual financial statements. Issuer-specific events, market trends, bid/ask quotes of brokers and information providers and other data may be reviewed in the course of making a good faith determination of the digital asset’s fair value. The fair value of digital assets pledged as collateral uses Level 2 inputs as they are based on observable inputs other than quoted prices for identical assets in active markets.
| 11 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
purposes of impairment testing, wrapped digital assets, such as fwdSOL, with a value of $
The Company applies ASC 820 in the valuation of its written SOL option contracts. The fair value of these derivative instruments reflects the amount that a market participant would require to assume the Company’s obligation as the writer of the option in an orderly transaction on the measurement date. As the options are European-style and reference the price of SOL, the Company measures fair value using a market-participant option-pricing model that incorporates assumptions consistent with those used in the principal market for SOL-based derivatives.
The valuation incorporates inputs such as the current spot price of SOL, the contractual strike price, the remaining term of the option, risk-free interest rates, and implied volatility. While certain inputs are derived from active markets, the Company’s implied volatility assumptions require the use of market-participant estimates due to limited depth and liquidity in the SOL options market. As a result, the fair value measurement includes significant unobservable inputs and is classified within Level 3 of the fair value hierarchy.
During the quarter ended March 31, 2026, the Company entered into written option contracts referencing the price of SOL. Implied volatility for these contracts was derived primarily from observable market data for actively traded SOL options and supplemented with market-participant assumptions when quoted maturities or strikes did not align with the Company’s contracts. The Company also evaluated the effect of nonperformance risk, including the impact of collateral pledged, and concluded that nonperformance risk did not materially affect the fair value of the written options. All written option contracts expired prior to March 31, 2026, and no derivative liabilities were outstanding as of the reporting date.
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy for each of those assets and liabilities:
| Schedule of fair value assets and liabilities | ||||||||||||||||
| March 31, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Digital assets | $ | $ | $ | $ | ||||||||||||
| Digital assets - restricted | ||||||||||||||||
| Digital assets pledged for collateral with related party | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Loans Payable - Digital Assets | ||||||||||||||||
| September 30, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Digital assets | $ | $ | $ | $ | ||||||||||||
There were no transfers between Level 1, Level 2, or Level 3 during the period.
| 12 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company estimates the fair value of employee and non-employee director share-based compensation on the date of grant using the Black-Scholes option pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. The fair value of employee and non-employee director share-based compensation is recognized in the condensed consolidated statements of operations over the related service or vesting period of each grant. If awards contain performance conditions, compensation expense is recognized over the estimated service period if it is determined that achievement of the performance condition is probable. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in substance, multiple awards.
Leases
Lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The Company has certain leases that may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease assets are shown as right-of-use assets on the condensed consolidated balance sheets. The current and long-term portions of operating lease liabilities are shown separately as such on the condensed consolidated balance sheets.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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 condensed 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 condensed 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 adopted this pronouncement in the first quarter of Fiscal 2026 with no material impact on its condensed consolidated financial statements.
| 13 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 3 | DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE |
In March 2025, in connection
with the fourth Conversion Agreement (see Note 8), Forward China determined it would not renew the Buying Agency and Supply Agreement
(“Sourcing Agreement”), which subsequently expired on May 9, 2025 (see Note 8). Without this agreement, the Company determined
it would not continue the OEM segment of the business and committed to a plan to sell the segment. On May 16, 2025, the Company and Forward
US entered into a transaction agreement with Forward China, pursuant to which: (i) the Company sold all equity interest in Forward Switzerland
and Forward UK and sold certain other net assets related to Forward US’ OEM segment to Forward China to satisfy outstanding payables
due to Forward China under the Sourcing Agreement; (ii) the Company and Forward China terminated the Sourcing Agreement and extended the
term of the Note Payable (see Note 8) to December 31, 2025; and (iii) the Company paid Forward China $
The sale of the OEM business was considered a strategic shift that had a significant impact on the Company’s operations and financial results. The assets and liabilities of the OEM segment were classified as assets and liabilities held for sale on the condensed consolidated balance sheets at September 30, 2025. The results of operations for the OEM segment have been classified as discontinued operations on the condensed consolidated statements of operations for the three and six months ended March 31, 2025.
The following table presents the major classes of the “income from discontinued operations, net of tax” in our condensed consolidated statement of operations for the three and six months ended March 31, 2025.
| Schedule of discontinued operations | ||||||||
For the Ended | For the Ended | |||||||
| 2025 | 2025 | |||||||
| Revenues, net | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Income from discontinued operations | $ | $ | ||||||
There were no material amounts of depreciation, amortization, investing or financing cash flow activities in the three or six months ended March 31, 2025. The only significant non-cash operating cash flow activity for the discontinued operations in the three and six months ended March 31, 2025 was the conversion of accounts payable to Forward China into preferred stock in February and March of 2025 (See Note 8).
| 14 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 4 | DIGITAL ASSETS |
The following table shows the quantity of tokens, cost basis and carrying value of digital assets held by the Company as of:
| Schedule of fair value | ||||||||||||
| March 31, 2026 | ||||||||||||
| Quantity | Historical Cost | Carrying Value | ||||||||||
| SOL | $ | $ | ||||||||||
| 2Z | ||||||||||||
| other | ||||||||||||
| Digital assets measured at fair value | – | |||||||||||
| Digital assets not measured at fair value | ||||||||||||
| Total Digital Assets | $ | $ | ||||||||||
| September 30, 2025 | ||||||||||||
| Quantity | Historical Cost | Carrying Value | ||||||||||
| SOL | $ | $ | ||||||||||
Restricted Digital Assets
The doublezero (“2Z”) tokens are considered restricted digital assets and are subject to certain lockup restrictions through approximately October 2029.
Staked Digital Assets
The Company had
staked $
| NOTE 5 | SEGMENTS AND CONCENTRATIONS |
As a result of our new digital asset treasury strategy and discontinuing the OEM segment, the Company now has reportable segments: digital assets and design. See Note 2 for more information on the composition and accounting policies of our reportable segments. The results of the OEM segment were classified as discontinued operations as discussed in Note 3. The prior year segment disclosures have been reformatted from what was previously disclosed to conform to the current year presentation.
The Company’s Chief Executive Officer serves as the Chief Operating Decision Maker (“CODM”) and evaluates the financial performance of the business and makes resource allocation decisions on the basis of revenue, gross profit and net loss from continuing operations before income taxes for each reportable segment.
| 15 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The tables below represent the primary measure of segment performance evaluated by the CODM, as well as additional measures that are regularly provided to the CODM on a segment level.
| Schedule of segment performance | ||||||||||||||||
| Digital Assets Segment | ||||||||||||||||
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Asset management fees (a) | ||||||||||||||||
| Impairment of digital assets | ||||||||||||||||
| Loss on digital assets | ||||||||||||||||
| Derivative gain, net | ( | ) | ( | ) | ||||||||||||
| Interest income | ( | ) | ( | ) | ||||||||||||
| Loss from continuing operations before income taxes | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Design Segment | ||||||||||||||||
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Depreciation expense (a) | ||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||
| Sales and marketing personnel costs | ||||||||||||||||
| Sales promotion and marketing expenses | ||||||||||||||||
| General and administrative personnel costs | ||||||||||||||||
| Occupancy costs | ||||||||||||||||
| Amortization expense (a) | ||||||||||||||||
| Impairment of goodwill and intangible assets | ||||||||||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other segment expenses (b) | ||||||||||||||||
| Income/(loss) from continuing operations before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (a) | |
| (b) |
| 16 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table is a reconciliation of segment income/loss from continuing operations before taxes to our condensed consolidated loss from continuing operations before taxes.
| Schedule of reconciliation of segment loss | ||||||||||||||||
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Digital asset segment loss from continuing operations before taxes | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Design segment income (loss) from continuing operations before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Corporate and other non-segment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated loss from continuing operations before taxes | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
Segment assets are shown in the table below and consist of digital assets and accounts receivable.
| Schedule of segment assets | ||||||||
| March 31, | September 30, | |||||||
| 2026 | 2025 | |||||||
| Digital assets segment | $ | $ | ||||||
| Design segment | ||||||||
| Total segment assets | ||||||||
| General corporate assets | ||||||||
| Total assets | $ | $ | ||||||
No customers represented
more than
Accounts receivable from
three design segment customers represented
There were no concentrations of revenue or accounts receivable with any customers in our digital assets segment.
| NOTE 6 | SHAREHOLDERS’ EQUITY |
At-the-Market Offering
On
September 16, 2025, the Company entered into a Controlled Equity Offering Sales Agreement (the “ATM”) with Cantor Fitzgerald
& Company (“Cantor”), as principal and/or agent, pursuant to which it may offer and sell, from time to time, through Cantor,
shares of its common stock, having an aggregate offering price of up to $4 billion. Shares will be issued and sold pursuant to the Company’s
effective registration statement on Form S-3 as previously filed with, and declared effective by, the SEC. The Company filed a prospectus
supplement, dated September 16, 2025, with the SEC in connection with the offer and sale of shares under the ATM. We pay Cantor a commission
of up to 3% of the gross proceeds from each sale of shares under the ATM. During the six months ended March 31, 2026, we sold
shares of common stock under the ATM for gross proceeds of $
| 17 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Shares Reserved for Future Issuance
At March 31, 2026, the Company had a total of shares reserved for future issuance as follows: (i) shares related to the ATM, (ii) shares related to pre-funded warrants, and (iii) shares related to other warrants.
Tokenization of Common Stock
In
September 2025, the Company entered into a digital transfer agent agreement with Superstate Services LLC (“Superstate”) as
its co-transfer agent, to give shareholders the ability to tokenize their holdings of the Company’s common stock on the Solana blockchain.
Any tokenized shares are recorded and maintained by Superstate and represent the same ownership interests as the corresponding shares
of the Company’s common stock. At March 31, 2026,
Share Repurchases
In
November 2025, the Company’s Board of Directors authorized a share repurchase program permitting the Company to purchase up to $
During
the three months ended March 31, 2026, the Company executed open market purchases of shares at an average cost of $ per
share for an aggregate cost of $
In
addition to the open market purchases described above, in March 2026, the Company entered into a privately negotiated repurchase with
Multicoin Capital Master Fund, LP (“Multicoin”), an institutional investor and related party (see Note 8), pursuant to which
the Company repurchased shares of its common stock at a price of $ per share for an aggregate cost of $
In
April, the Company executed open market purchases of an additional shares at an average cost of $ per share for an aggregate
cost of $
“Blank Check” Preferred Stock
The Company is authorized to issue up to shares of “blank check” preferred stock. The Board has the authority and discretion, without shareholder approval, to issue preferred stock in one or more series for any consideration it deems appropriate, and to fix the relative rights and preferences thereof including their redemption, dividend and conversion rights.
| 18 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2021 Equity Incentive Plan
On March 3, 2026, shareholders of the Company approved an amendment to increase the shares available for future issuance under the 2021 Equity Incentive Plan to .
Stock Options
In March 2026, the Company granted options to management to purchase an aggregate of shares of its common stock at a weighted average exercise price of $10.05 per share. The options vest in quarterly installments over a vesting period ranging from one to four years from the date of grant and expire between 5 and 10 years from the date of the grant. The options have a weighted average grant-date fair value of $ per share and an aggregate grant-date fair value of $, which will be recognized, net of forfeitures, ratably over the vesting period.
In March 2026, the Company granted options to non-employee directors to purchase an aggregate of shares of its common stock at a weighted average exercise price of $5.02 per share. The options vest in quarterly installments over a period of one year from the date of grant and expire five years from the date of the grant. The options have a weighted average grant-date fair value of $ per share and an aggregate grant-date fair value of $, which will be recognized, net of forfeitures, ratably over the vesting period.
In applying the Black-Scholes option pricing model to options granted during the three months ended March 31, 2026, the Company used the following assumptions:
| Schedule of assumptions | ||
| Expected term (years) | ||
| Expected volatility | % - % | |
| Risk free interest rate | % - % | |
| Expected dividends |
The Company recognized compensation expense for stock option awards of $ during the three months ended March 31, 2026, of which $ was recorded as a component of sales and marketing expenses and $ was recorded as a component of general and administrative expenses in its condensed consolidated statements of operations. The Company recognized compensation expense for stock option awards of $ during the six months ended March 31, 2026, of which $ was recorded as a component of sales and marketing expenses and $ was recorded as a component of general and administrative expenses in its condensed consolidated statements of operations. The Company recognized compensation expense for stock option awards of $ and $ during the three and six months ended March 31, 2025, respectively, which was recorded as a component of general and administrative expenses in its condensed consolidated statements of operations.
As of March 31, 2026, there was $ total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of years.
Restricted Stock Units
In March 2026, the Company granted to certain members of management restricted stock units (“RSUs”) that contain only service conditions for vesting. The RSUs have an aggregate grant date fair value of $ based on the closing price of the Company’s common stock on the date of grant and vest in quarterly installments over a period of four years. The Company recognized compensation expense for RSUs of $ in the three and six months ended March 31, 2026. There was expense related to RSU awards in the three or six months ended March 31, 2025.
As of March 31, 2026, there was $ total unrecognized compensation cost related to nonvested RSUs that is expected to be recognized over a weighted average period of years.
| 19 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Performance Stock Units
In March 2026, the Company granted to certain members of management restricted stock units that contain both service and performance conditions for vesting (“PSUs”). The PSUs have an aggregate grant date fair value of $ based on the closing price of the Company’s common stock on the date of grant. Vesting of the PSUs occurs only if and when certain Company performance measures are achieved. Expense related to PSUs is recognized over the expected period of time to achieve such performance measures only when their achievement is considered probable in accordance with the related accounting guidance. The Company recognized compensation expense for PSUs of $ in the three and six months ended March 31, 2026.
As of March 31, 2026, there was $ total unrecognized compensation cost related to nonvested PSUs that is expected to be recognized over a weighted average period of years.
| NOTE 7 | LOSS / EARNINGS PER SHARE |
Basic loss/earnings per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period and includes pre-funded warrants from their date of issuance. Diluted loss/earnings per share data is computed using the weighted average number of common and dilutive common equivalent shares outstanding during each period. Dilutive common equivalent shares consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method.
A reconciliation of basic and diluted earnings/loss per share is as follows:
| Schedule of reconciliation of basic and diluted earnings per share | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Loss from continuing operations | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Income from discontinued operations, net of tax | ||||||||||||||||
| Net loss | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Dilutive common share equivalents | ||||||||||||||||
| Weighted average dilutive shares outstanding | ||||||||||||||||
| Basic (loss) / earnings per share: | ||||||||||||||||
| Basic loss per share from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic earnings per share from discontinued operations | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted (loss) / earnings per share: | ||||||||||||||||
| Diluted loss per share from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted earnings per share from discontinued operations | ||||||||||||||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 20 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following options and warrants were excluded from the calculation of diluted earnings per share for the three and six months ended March 31, 2026 and 2025 because their inclusion would have been anti-dilutive:
| Schedule of anti-dilutive shares | ||||||||||||||||
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Options | ||||||||||||||||
| Warrants | ||||||||||||||||
| Total potentially dilutive shares | ||||||||||||||||
| NOTE 8 | RELATED PARTY TRANSACTIONS |
Galaxy Service Agreement
The Company has a services agreement (the “Services Agreement”) with Galaxy Digital LP (“Galaxy”), pursuant to which the Company engaged Galaxy to provide certain operational, financial and human resources services to assist with the inception of its new digital assets treasury business. Galaxy will not be providing any (i) tax advice or services, (ii) legal advice or services, or (iii) advice in connection with the Investment Company Act of 1940, as amended (the “Investment Company Act”), or any related analyses thereto.
As compensation for its services
from September 2025 through March 2026, we paid Galaxy fees of approximately $
Galaxy Asset Management Agreement
The Company has an asset management agreement (the “Asset Management Agreement”) with Galaxy Digital Capital Management LP, an SEC-registered investment adviser (the “Asset Manager”), pursuant to which the Company appointed the Asset Manager to provide discretionary investment management services with respect to all of the Company’s cash, cash equivalents, stablecoins, cryptocurrency and other investible assets (excluding (i) publicly-traded equities acquired pursuant to mergers, acquisitions, combinations or other similar transactions pursuant to which the Company acquires or otherwise combines or merges with another publicly-traded digital asset treasury company, (ii) privately offered equity securities and (iii) non-publicly traded convertible debt instruments). Title to the account and all account assets will be held in our name. The Asset Manager is not authorized to act as custodian of our assets, nor to take possession or title to any assets.
As compensation for the Asset Manager’s services, we will pay management fees of 0.6% per annum of the value of the Account Assets (as defined in the Asset Management Agreement). In addition, the Asset Manager is authorized to appoint an affiliate to stake some or all of the SOL purchased for, maintained in the account, or otherwise owned or controlled by the Company. Such Asset Manager affiliate will be entitled to mutually agreed upon staking-based fees, subject to certain parameters according to a schedule set forth in the Asset Management Agreement. The Asset Manager is otherwise responsible for all of its overhead costs and the custody fees of any custodian selected by the Asset Manager, and the Company will pay or reimburse the Asset Manager for all reasonable and documented expenses related to the operation of the account.
| 21 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Asset Management Agreement expires in September 2028 and renews for successive one-year renewal periods unless the Company or the Asset Manager terminates or elects not to continue effectiveness of the Asset Management Agreement. The Asset Management Agreement may be terminated by either party without cause after the initial term or any subsequent renewal period upon 90 days’ prior written notice before the expiration of such term.
During the three and six
months ended March 31, 2026, the Company incurred fees of $
Digital Asset Loan Receivable from Galaxy
In November 2025,
the Company and Galaxy Digital LLC (“Borrower”) entered into a loan agreement whereby the Company
loaned
Master Digital Currency Loan Agreement with Galaxy
In February 2026, the Company entered into a Master Digital Currency Loan Agreement (the “Loan Agreement”) with Galaxy Digital LLC (“Galaxy LLC”), under which the Company may borrow digital assets and/or U.S. dollars from Galaxy LLC pursuant to individual loan term sheets (each, a “Loan”). The Loan Agreement establishes the general terms governing such loans, including procedures for loan requests, collateral requirements, borrow fees, callable and term loan structures, margin call and refund provisions, and rehypothecation rights, subject to mutual consent.
In connection with the Loan
Agreement, in March 2026, the Company executed five separate Loans in an aggregate amount of $
In April and May 2026, the
Company executed three additional Loans in an aggregate amount of $
The Loans are secured by approximately 883,000 units of the Company’s fwdSOL, which Galaxy LLC has the right to sell, pledge or rehypothecate per the terms of the Loan Agreement. This portion of the Company’s fwdSOL is presented as Digital assets pledged as collateral with related party on the condensed consolidated financial statements.
Written SOL Option Contracts
During the three months ended March 31, 2026, the Company entered into OTC European-style option contracts referencing the price of SOL with Galaxy Trading Mercury LLC, a related party. Under these contracts, the Company acted as the writer of call and put options and received upfront premiums at inception. The contracts were governed by an ISDA Master Agreement and related Credit Support Annex, which required the Company to post collateral to secure its obligations. All written option contracts expired prior to March 31, 2026. Additional information regarding derivative instruments is provided in Note 11.
| 22 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Galaxy Securities LLC Agreement
In connection with its share
repurchase program (see Note 6) the Company paid $
Multicoin Share Repurchase
In September 2025, in connection
with our private placement transaction, Multicoin invested $
Buying Agency and Supply Agreement
The Company had a Buying Agency and Supply Agreement (the “Supply Agreement”) with Forward China. The Supply Agreement provided that, upon the terms and subject to the conditions set forth therein, Forward China would act as the Company’s exclusive buying agent and supplier of Products (as defined in the Supply Agreement) in the Asia-Pacific region. The Company purchased products at Forward China’s cost and, from October 2023 through October 2024, paid Forward China a monthly service fee equal to the sum of (i) $65,833, and (ii) 4% of “Adjusted Gross Profit”, which is defined as the selling price less the cost from Forward China. Due to the Company’s exit from its retail line of business and decline in the OEM distribution segment business, this sourcing agreement expired October 31, 2024. In November 2024, the Company and Forward China agreed to: (i) extend the sourcing agreement until April 30, 2025, but allow either party to cancel with 30 days’ notice, (ii) reduce the fixed portion of the sourcing fee to $35,000 per month, and (iii) change the payment terms to better align with payments from the Company’s customers. The Sourcing Agreement was extended until May 9, 2025, and was subsequently terminated in connection with the sale of the OEM segment. See Note 3.
In connection with the sale of the OEM segment, effective May 16, 2025, the Company and Terence Wise, who served as the Chief Executive Officer of the Company, the Chairman of the Board of Directors, and a director, entered into a Separation Agreement pursuant to which, Mr. Wise resigned from all of these positions with the Company.
Terence Wise, former Chief
Executive Officer and Chairman of the Company, is the owner of Forward China and beneficially owned more than 5% of the Company’s
common stock prior to our September 2025 financing. In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owned
more than 5% of the Company’s common stock prior to our September 2025 financing. The Company recorded service fees to Forward China
of $
In order to preserve the Company’s liquidity, in November 2023, the Company and Forward China entered into an agreement whereby Forward China agreed to limit the amount of outstanding payables it would seek to collect from the Company to $500,000 in any 12-month period, which the Company agreed to pay within 30 days of any such request. This agreement pertained only to payables that were outstanding at October 30, 2023 of approximately $7,365,000. Purchases from Forward China made after October 30, 2023, were not covered by this agreement and were expected to be paid according to normal payment terms. In connection with the sale of the OEM segment in May 2025 (see Note 3), this agreement was terminated and all amounts due thereunder extinguished.
| 23 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounts Payable Conversion Agreements
In order to maintain compliance
with Nasdaq’s listing standards, the Company entered into four separate agreements with Forward China (the “Conversion Agreements”),
pursuant to which Forward China agreed to convert an aggregate $4,925,000 of amounts due to Forward China into shares of preferred stock.
Under the terms of the Conversion Agreements, in Fiscal 2025 and Fiscal 2024, respectively, Forward China agreed to convert $
Promissory Note
On January 18, 2018,
the Company issued a $
| NOTE 9 | LEGAL PROCEEDINGS |
From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. At March 31, 2026, and through the date of this filing, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business.
| NOTE 10 | LEASES |
The Company’s operating
leases are primarily for corporate, engineering, and administrative office space and the related expense is recorded in general and administrative
expenses on the condensed consolidated financial statements. Total operating lease expense for the three and six months ended March 31,
2026 was $
At March 31, 2026, the Company’s
operating leases had a weighted average remaining lease term of
At March 31, 2026, future minimum payments under non-cancellable operating leases were as follows:
| Schedule of future minimum payments under non-cancellable operating leases | ||||
| Remainder of Fiscal 2026 | $ | |||
| Fiscal 2027 | ||||
| Fiscal 2028 | ||||
| Fiscal 2029 | ||||
| Fiscal 2030 | ||||
| Fiscal 2031 | ||||
| Thereafter | ||||
| Total future minimum lease payments | ||||
| Less imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less current portion of lease liabilities | ) | |||
| Long-term portion of lease liabilities | $ |
| 24 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 11 | DERIVATIVES |
During the quarter ended March 31, 2026, the Company entered into OTC European-style option contracts referencing the price of SOL. Under these contracts, the Company acted as the writer of call and put options and received upfront premiums at inception. The options provided the counterparty with the right, but not the obligation, to purchase or sell a specified quantity of SOL at a fixed strike price on the contract expiration date. The contracts were governed by an ISDA Master Agreement and related Credit Support Annex, which required the Company to post collateral to secure its obligations.
The Company recognized a
net derivative gain of $
The counterparty to the written option contracts was Galaxy Trading Mercury LLC which is a related party (see Note 8). Information regarding the fair value hierarchy classification and valuation of derivative instruments is provided in Note 2.
| NOTE 12 | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued expenses and other current liabilities at March 31, 2026 and September 30, 2025 were as follows:
| Schedule of accrued expenses and other current liabilities | ||||||||
| March 31, 2026 | September 30, 2025 | |||||||
| Income taxes payable | $ | $ | ||||||
| Accrued commissions/bonuses | ||||||||
| Paid time off | ||||||||
| Professional fees | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
| NOTE 13 | SUBSEQUENT EVENT |
On April 27, 2026, the Company invested approximately $2.2 million, through a combination of primary and secondary share purchases, as part of a $5.0 million equity round at a $25.0 million post-money valuation in On Re Ltd., a private tokenized reinsurance company on the Solana blockchain which is incorporated in England and Wales. A small portion of the primary subscription remains subject to regulatory approval from the Bermuda Monetary Authority. In connection with the investment, the Company also committed to purchase up to $25.0 million of the ONyc token, which is built natively and trades exclusively on the Solana blockchain, and which will meaningfully expand On Re's reinsurance underwriting capacity. The Company’s obligation to fund this commitment is subject to the terms and conditions set forth in the applicable investment documentation. If the Company fails to fund this commitment within thirty days of the applicable deadline, lead co-investors would have the right to acquire the Company’s equity stake in On Re at the original subscription price of approximately $2.2 million. The Company has evaluated this commitment in the context of its liquidity planning and believes it has adequate resources to fund this obligation, subject to market conditions.
| NOTE 14 | RISKS AND UNCERTAINTIES |
The Company is subject to various risks including market risk, liquidity risk and other risks related to its concentration in SOL. Investing in SOL is currently highly speculative and volatile.
The price of SOL has been, and will likely continue to be, highly volatile. Our financial results and the market price of our common stock could be materially adversely affected if the price of SOL decreases substantially, as it has in the past, including as a result of shifts in market sentiment, speculative trading, macroeconomic trends, technology-related disruptions and regulatory announcements.
| 25 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling digital assets. Accordingly, volatility in our earnings may be significantly more than what we experienced in prior periods, and it may be difficult to evaluate the Company’s business and future prospects. We also may need to perform an analysis each quarter to identify whether events or changes in circumstances indicate that our digital assets are impaired.
The Company faces risks relating to the custody of its digital assets. Cybersecurity threats, including hacking, phishing and other malicious attacks, could result in the loss, theft or misappropriation of our SOL. If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our private keys, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected.
The Company interacts with smart contracts deployed on the Solana network. Smart contracts are self-executing code that operate without human intervention once deployed and are subject to 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. There is no assurance that the smart contracts we integrate with or rely upon will function as intended or remain secure. These vulnerabilities, flaws and potential exploitations could have a materially adverse impact on our business and financial condition.
We use our digital assets in DeFi applications, which may include over-collateralized borrow-lend vaults, token-exchange pools, and other financial or commercial agreements, which introduce novel risks relating to software code bugs, liquidation risks, and governance risks, and can be subject to failures or exploits. Network congestion or downtime can increase the likelihood of asset loss or liquidation. The volatility of digital assets deployed into DeFi applications may increase the likelihood of liquidation. DeFi applications generally operate on a user-to-protocol basis where a user does not know the identity of other parties. The use of monitoring and forensics software may not prevent the Company from engaging in DeFi protocols that are also used by bad actors or sanctioned persons.
There is no clearing house for SOL, nor is there a central or major depository for the custody of SOL. There is a risk that some or all of the Company’s SOL could be lost or stolen. There can be no assurance that our custodians will maintain adequate insurance or that such coverage will cover any losses with respect to the Company’s SOL. Further, transactions in SOL are irrevocable. Stolen or incorrectly transferred SOL may be irretrievable. As a result, any incorrectly executed transactions of the Company’s SOL could adversely affect an investment in the Company’s common stock.
The Company’s shareholders have no specific rights to any specific SOL or other digital assets held by the Company. Shareholders own equity interests in the Company, not direct interests in the Company's digital assets. In the event of the insolvency or bankruptcy of the Company, its assets, including digital assets, would be subject to the claims of creditors, and such assets may be inadequate to satisfy claims by shareholders. Additionally, in a bankruptcy proceeding, there may be disputes regarding the characterization and treatment of digital assets, which could further delay or reduce any potential recovery by shareholders. The legal and regulatory framework for digital assets in bankruptcy proceedings remains uncertain and evolving.
On March 17, 2026, the SEC issued a joint interpretation with the CFTC clarifying the application of the federal securities laws to certain types of crypto assets and transactions involving crypto assets. The interpretation establishes a token taxonomy classifying crypto assets into five categories: (i) digital commodities; (ii) digital collectibles; (iii) digital tools; (iv) stablecoins; and (v) digital securities. The SEC explicitly identified SOL as a “digital commodity” that is not itself a security. Digital commodities are defined as crypto assets that are intrinsically linked to and derive their value from the programmatic operation of a functional crypto system, as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others. The interpretation provides that digital commodities, digital collectibles, and digital tools are not themselves securities, though they may become subject to an investment contract under certain circumstances. The interpretation also clarifies that protocol staking activities do not involve the offer and sale of securities.
| 26 |
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Although the SEC's March 2026 interpretation provides significant clarity regarding the regulatory treatment of SOL and similar digital commodities, it is not federal legislation and uncertainty remains regarding certain aspects of digital asset regulation. A non-security crypto asset may become subject to the federal securities laws if it is offered and sold as part of an investment contract and digital commodities, such as SOL, are subject to federal commodities laws. Additionally, U.S. state and federal as well as foreign regulators and legislatures have taken and may take action against digital asset businesses or enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital asset activity.
If SOL is determined to be a security under federal or state securities laws or in a proceeding in a court of law, or otherwise, it may have material adverse consequences for SOL, making it more difficult to be traded, cleared or custodied compared to other digital assets that are not considered securities. In addition, if SOL is considered a security, the Company could be considered an unregistered investment company under the Investment Company Act of 1940, which could require the Company to register as an investment company (which may not be feasible given our current structure and operations), restructure our business model, or liquidate. If the Company is required to comply with additional regulatory obligations, it could result in a significant increase in operating expenses and make it difficult to continue our current operations, which would materially and adversely affect our business, financial condition and results of operations.
The Company relies on certain third-party providers to perform certain functions essential to its operations. Any disruptions to the Company’s service providers’ business operations resulting from business failures, financial instability, security failures, government mandated regulation or operational problems could have an adverse impact on the Company’s ability to access critical services and would be disruptive to the operations of the Company.
The Company may be subject to various litigation, regulatory investigations and other proceedings that arise in the ordinary course of business.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes thereto, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (the “2025 Form 10-K”). The following discussion and analysis compares our condensed consolidated results of operations for the three and six months ended March 31, 2026 (the “2026 Quarter” and the “2026 Period”, respectively) with those for the three and six months ended March 31, 2025 (the “2025 Quarter” and the “2025 Period”, respectively). All dollar amounts and percentages presented herein have been rounded to approximate values.
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements include, but are not limited to, statements regarding our liquidity, capital resources and financial condition, our growth strategy and future business plans, our expectations regarding the acquisition, holding, staking and disposition of digital assets, anticipated trends in the digital asset industry and the Solana ecosystem, and our ability to execute our digital asset treasury strategy. Forward-looking statements can generally be identified by words such as “anticipates,” “intends,” “may,” “might,” “will,” “would,” “should,” “could,” “potential,” “continues,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” “forecasts,” “targets,” “outlook,” “guidance,” “goal,” “objective” and similar expressions, or the negative of such terms, or other comparable terminology.
Forward-looking statements are based on our current expectations, estimates, projections and assumptions regarding our business, the economy, the regulatory environment for digital assets and other future conditions as of the date of this report. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are beyond our control. Our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. We caution you therefore against placing undue reliance on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation: fluctuations in the price of SOL and other digital assets, which have been and may continue to be highly volatile; regulatory developments affecting digital assets, including potential classification of SOL or other crypto assets as securities under federal or state securities laws; risks related to cybersecurity threats, hacking, phishing and other malicious attacks that could result in the loss, theft or misappropriation of our digital assets; risks related to custody arrangements for our digital assets and the potential loss of private keys; smart contract vulnerabilities, coding errors, security flaws and exploits in blockchain protocols we interact with; risks associated with our participation in DeFi protocols, including liquidation risks, governance risks and protocol failures; concentration risk from our significant holdings in SOL and the Solana ecosystem; the rewards and costs associated with staking or validating transactions, which may fluctuate based on network conditions; operational risks related to our validator infrastructure and third-party service providers; risks related to our At-the-Market offering facility and our ability to access capital markets; competition from other digital asset treasury companies; risks related to our share repurchase program and its impact on liquidity; macroeconomic conditions and their impact on digital asset markets; failure to keep our Registration Statement on Form S-3 effective; our ability to service our debt and other risks and uncertainties described in Item 1A, “Risk Factors” of our 2025 Form 10-K, and in our other filings with the SEC. All forward-looking statements speak only as of the date on which they are made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by applicable law, including federal securities laws.
Background and Business Overview
We are a Solana focused digital asset treasury company, with the strategy to buy, hold, stake, trade, invest in, and grow SOL and SOL related digital assets, protocols and businesses. Our mission is to expand and strengthen the Solana ecosystem by acquiring and staking SOL and engaging with, providing tools to and investing in the Solana protocol, Solana developers and Solana related projects in order to increase shareholder value. In connection with a private placement transaction in September 2025, we launched our digital asset treasury strategy, which we have been executing to date by holding SOL, staking SOL, operating a SOL validator, engaging in the SOL decentralized finance (“DeFi”) ecosystem and actively repurchasing shares of our common stock.
| 28 |
Under our new treasury policy and strategy, the principal holding in our treasury reserve on the balance sheet will be allocated to digital assets, primarily SOL, fwdSOL (a Liquid Staking Token, or “LST”, developed by the Company in collaboration with Socean Labs Inc., doing business as Sanctum, on the Solana blockchain) and similar assets. We have selected SOL as our primary treasury asset because we believe it is earlier in its lifecycle, operationally superior, higher yield generating and underexposed as compared to Bitcoin and other digital assets, presenting a unique opportunity for Forward to become the largest Solana asset treasury operator in the industry. Our planned approach involves acquiring SOL, staking our holdings via our own validator, deploying SOL into various DeFi protocols to earn yield, fees or rewards, lending SOL to earn interest, pledging SOL as collateral to borrow other assets and generating revenue through strategic acquisitions, partnerships and deployments within the Solana ecosystem.
Forward also operates an engineering services business, which provides hardware and software product design and engineering services to customers predominantly located in the U.S.
Discontinued Operations
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 prior period 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 former related party owned by the Company’s former CEO (see Note 8 to the condensed consolidated financial statements).
Unless otherwise noted, amounts related to discontinued operations are excluded from the disclosures presented herein. See Note 3 for more information on discontinued operations.
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 condensed 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 in our Annual Report on 2025 Form 10-K.
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 selling, general and administrative expenses within our financial statements.
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Certain equity grants vest upon the achievement of specified performance conditions. Compensation expense is recognized over the estimated service period if it is determined that achievement of the performance condition is probable. Estimating the probability and timing of achieving performance conditions is subjective and requires a significant amount of judgment. Changes to these estimates and the actual timing of any performance conditions achieved as compared to these estimates could have a material impact on the selling, general and administrative expenses within our financial statements.
Impairment of Digital Assets
We account for some of our digital assets, specifically fwdSOL, as indefinite-lived intangible assets in accordance with ASC Subtopic 350-30. These digital assets are initially recorded at cost and subsequently measured at cost less any impairment losses. We perform an impairment analysis each reporting period or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the fair value of these digital asset is less than their carrying value at any time during the period. The impaired digital asset is written down to its fair value at the time of impairment, and the impairment loss cannot be reversed in future periods even if fair values subsequently increase.
The determination of fair value requires significant judgment and involves the use of market prices from digital asset exchanges. We consider factors including trading volume, market liquidity, and the reliability of pricing sources when determining fair value. For fwdSOL, which may have limited trading activity, we may use alternative valuation methods including discounted cash flow analysis or other market-based approaches. Changes in market conditions, trading volumes, or the availability of reliable pricing information could materially affect our impairment assessments and results of operations.
Recent Accounting Pronouncements
For information on recent accounting pronouncements and impacts, see Note 2 to the unaudited condensed consolidated financial statements.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2025
2026 Quarter Highlights
| · | Revenues increased more than four times to $13.0 million in the 2026 Quarter compared to $3.1 million in the 2025 Quarter, largely driven by our new digital asset treasury strategy. |
| · | Gross margin increased significantly, from a negative 5.7% in the 2025 Quarter to 70.0% in the 2026 Quarter, driven by the high margin staking revenue generated by our digital asset treasury strategy. |
| · | We repurchased 9,215,000 shares of our common stock during the 2026 Quarter at a cost of $47,139,000, reducing our shares outstanding by 10.1% from December 31, 2025. |
| · | We secured $40 million in debt financing through Galaxy Digital LLC with a weighted average interest rate of 3.4% per year, providing access to capital at a cost that is advantageous relative to other companies in our business. |
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Consolidated Results
The table below summarizes our consolidated results from continuing operations for the 2026 Quarter as compared to the 2025 Quarter. Dollar amounts and percentages have been rounded to approximate values.
| Consolidated Results of Operations | ||||||||||||||||
| 2026 Quarter | 2025 Quarter | Change ($) | Change (%) | |||||||||||||
| Revenues, net | $ | 12,961,000 | $ | 3,123,000 | $ | 9,838,000 | 315.0% | |||||||||
| Cost of sales | 3,889,000 | 3,302,000 | 587,000 | 17.8% | ||||||||||||
| Gross profit | 9,072,000 | (179,000 | ) | 9,251,000 | (5168.2% | ) | ||||||||||
| Sales and marketing expenses | 570,000 | 148,000 | 422,000 | 285.1% | ||||||||||||
| General and administrative expenses | 6,061,000 | 1,495,000 | 4,566,000 | 305.4% | ||||||||||||
| Loss on digital assets | 201,706,000 | – | 201,706,000 | – | ||||||||||||
| Impairment of digital assets | 85,093,000 | – | 85,093,000 | – | ||||||||||||
| Derivative gain, net | (269,000 | ) | – | (269,000 | ) | – | ||||||||||
| Operating loss | (284,089,000 | ) | (1,822,000 | ) | (282,267,000 | ) | 15492.2% | |||||||||
| Interest income, net | (191,000 | ) | (13,000 | ) | (178,000 | ) | 1369.2% | |||||||||
| Interest expense, net | 59,000 | 12,000 | 47,000 | 391.7% | ||||||||||||
| Other expense, net | – | 1,000 | (1,000 | ) | – | |||||||||||
| Benefit from income taxes | (875,000 | ) | – | (875,000 | ) | – | ||||||||||
| Loss from continuing operations | $ | (283,082,000 | ) | $ | (1,822,000 | ) | $ | (281,260,000 | ) | 15436.9% | ||||||
The discussion that follows below provides further details about our results from continuing operations for the 2026 Quarter as compared to the 2025 Quarter.
The increase in net revenues from the 2025 Quarter to the 2026 Quarter resulted from $9,334,000 in staking and other related revenue generated by our digital assets segment and $504,000 increase in design segment revenue, primarily attributable to the net increase in volume of work and projects with existing and new customers.
Our gross profit increased and gross margin increased from a negative 5.7% in the 2025 Quarter to 70.0% in the 2026 Quarter. The increase in both gross profit and gross margin resulted from the high margin staking revenue generated by our digital assets segment, which generated gross profit of $8,517,000 and gross margin of 91.2%. In the design segment, gross profit increased $734,000 and gross margin increased from a negative 5.7% in the 2025 Quarter to 15.3% in the 2026 Quarter driven by improved utilization and cost cutting measures implemented in January and June of 2025.
Sales and marketing expenses increased primarily due to personnel costs, including $256,000 of non-cash share-based compensation expense, and increased marketing spend, both related to our new digital asset treasury strategy.
Digital assets general and administrative expenses include $1,107,000 of asset management and related fees. Corporate general and administrative expenses increased $3,722,000 due to higher professional fees related to our services agreement with Galaxy, higher investor relations spending and higher personnel costs associated with hiring personnel necessary to execute our new digital assets treasury strategy, including $542,000 of non-cash share-based compensation expense. Design segment general and administrative expenses decreased $263,000 due to lower personnel costs related to staff reductions and other cost-cutting measures in response to the decline in revenues. 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.
The loss on digital assets in the 2026 Quarter of $201,706,000 was driven by the reduction in the fair value of our digital assets resulting from the decline in the market value of SOL. The impairment charge of $85,093,000 relates to our holdings of fwdSOL and is also driven by the decline in market value of SOL. These amounts reflect the volatility inherent in digital asset holdings and the Company’s accounting policy that does not permit the reversal of impairment losses even if fair values subsequently increase. The derivative gain is the net impact of written SOL option contracts during the 2026 Quarter. The change in interest income, net is due to non-cash interest income of $114,000 related to loaned SOL plus an increase in cash interest income of $64,000 related to higher cash balances during the 2026 Quarter compared to the 2025 Quarter. Interest expense – related party of $59,000 represents interest expense on the $40,000,000 loan payable with Galaxy Digital LLC.
The income tax benefit in the 2026 Quarter resulted from the reversal of income tax expense recorded in the first quarter of fiscal 2026 resulting from the recently completed section 382 tax study, partially offset by taxable income generated in the 2026 Quarter for which NOLs may not be available to offset. In the 2025 Quarter, we reported no income tax provision or benefit due to the existence of significant net operating loss carryforwards.
Consolidated basic and diluted loss per share from continuing operations were $2.98 and $1.65 for the 2026 Quarter and the 2025 Quarter, respectively.
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2026 Period Highlights
| · | Revenues increased more than four times to $34.4 million in the 2026 Period compared to $7.7 million in the 2025 Period, largely driven by our new digital asset treasury strategy. |
| · | Gross margin increased significantly from 12.3% in the 2025 Period to 75.4% in the 2026 Period, driven by the high margin staking revenue generated by our digital asset treasury strategy. |
| · | We repurchased 10,755,000 shares of our common stock during the 2026 Period at a cost of $58,022,000, reducing our shares outstanding by 11.4% from September 30, 2025. |
| · | We secured $40 million in debt financing through Galaxy Digital LLC with a weighted average interest rate of 3.4% per year, providing access to capital at a cost that is advantageous relative to other companies in our business. |
Consolidated Results
The table below summarizes our consolidated results from continuing operations for the 2026 Period as compared to the 2025 Period. Dollar amounts and percentages have been rounded to approximate values.
| Consolidated Results of Operations | ||||||||||||||||
| 2026 Period | 2025 Period | Change ($) | Change (%) | |||||||||||||
| Revenues, net | $ | 34,396,000 | $ | 7,747,000 | $ | 26,649,000 | 344.0% | |||||||||
| Cost of sales | 8,475,000 | 6,793,000 | 1,682,000 | 24.8% | ||||||||||||
| Gross profit | 25,921,000 | 954,000 | 24,967,000 | 2617.1% | ||||||||||||
| Sales and marketing expenses | 1,105,000 | 308,000 | 797,000 | 258.8% | ||||||||||||
| General and administrative expenses | 12,759,000 | 3,141,000 | 9,618,000 | 306.2% | ||||||||||||
| Loss on digital assets | 761,919,000 | – | 761,919,000 | – | ||||||||||||
| Impairment of digital assets | 118,137,000 | – | 118,137,000 | – | ||||||||||||
| Derivative gain, net | (269,000 | ) | – | (269,000 | ) | – | ||||||||||
| Goodwill impairment | – | 225,000 | (225,000 | ) | (100.0% | ) | ||||||||||
| Operating loss | (867,730,000 | ) | (2,720,000 | ) | (865,010,000 | ) | 31801.8% | |||||||||
| Interest income, net | (868,000 | ) | (29,000 | ) | (839,000 | ) | 2893.1% | |||||||||
| Interest expense, net | 59,000 | 24,000 | 35,000 | 145.8% | ||||||||||||
| Other expense, net | – | 5,000 | (5,000 | ) | (100.0% | ) | ||||||||||
| Provision for income taxes | 1,812,000 | – | 1,812,000 | – | ||||||||||||
| Loss from continuing operations | $ | (868,733,000 | ) | $ | (2,720,000 | ) | $ | (866,013,000 | ) | 31838.7% | ||||||
The discussion that follows below provides further details about our results from continuing operations for the 2026 Period as compared to the 2025 Period.
The increase in net revenues from the 2025 Period to the 2026 Period resulted from $26,715,000 in staking and other related revenue generated by our digital assets segment and was partially offset by a $66,000 decline in design segment revenue, primarily attributable to the loss of a major design customer in December 2024 and partially offset by the net increase in volume of work and projects with other customers.
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Our gross profit increased and gross margin increased from 12.3% in the 2025 Period to 75.4% in the 2026 Period. The increase in both gross profit and gross margin resulted from the high margin staking revenue generated by our digital assets segment, which generated gross profit of $24,500,000 and gross margin of 91.7%. In the design segment, gross profit increased $467,000 and gross margin increased from 12.3% in the 2025 Period to 18.5% in the 2026 Period driven by improved utilization and cost cutting measures implemented in January and June of 2025.
Sales and marketing expenses increased $839,000 due to increased outside marketing spend and marketing personnel costs related to our new digital asset treasury strategy, including $256,000 of non-cash share-based compensation expense, which was partially offset by a $42,000 reduction in design segment marketing expenses, driven by cost reduction efforts, including lower personnel costs and lower marketing spend.
Digital assets general and administrative expenses include $2,846,000 of asset management and related fees. Corporate general and administrative expenses increased $7,449,000 due to higher professional fees related to our services agreement with Galaxy, higher investor relations spending and higher personnel costs associated with hiring personnel necessary to execute our new digital assets treasury strategy, including $559,000 of non-cash share-based compensation expense. Design segment general and administrative expenses decreased $676,000 due to lower personnel costs related to staff reductions and other cost-cutting measures in response to the decline in revenues. 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 the 2025 Period, the Company recorded a design segment goodwill impairment charge of $225,000 related to the IPS reporting unit. This impairment charge resulted from recurring impairment testing and was driven by a reduction in expected future performance of the reporting unit.
The loss on digital assets in the 2026 Period of $761,919,000 was driven by the reduction in the fair value of our digital assets resulting from the decline in the market value of SOL. The impairment charge of $118,137,000 relates to our holdings of fwdSOL and is also driven by the decline in market value of SOL. These amounts reflect the volatility inherent in digital asset holdings and the Company’s accounting policy that does not permit the reversal of impairment losses even if fair values subsequently increase. The derivative gain is the net impact of written SOL option contracts during the 2026 Period. The change in interest income, net is due to non-cash interest income of $594,000 related to loaned SOL plus an increase in cash interest income of $245,000 related to higher cash balances during the 2026 Period compared to the 2025 Period.
The income tax provision in the 2026 Period resulted from taxable income generated for which NOLs may not be available to offset due to certain IRS limitations. For the 2025 Period, we reported no income tax provision or benefit due to the existence of significant net operating loss carryforwards.
Consolidated basic and diluted loss per share from continuing operations were $8.95 and $2.47 for the 2026 Period and the 2025 Period, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Prior to our recent financings, our primary source of liquidity has been our operations. Following our strategic pivot to a digital asset treasury strategy in September 2025, our liquidity profile has fundamentally changed. While we anticipate that our current liquidity and financial resources will remain adequate to manage our operating and financial requirements for at least the next twelve months from the date of this filing, this assessment assumes that we will be able to liquidate digital assets in amounts and at times necessary to meet our obligations, which may not be possible during periods of market stress or reduced liquidity. Additionally, our liquidity assessment does not account for potential margin calls or collateral requirements that may arise from our DeFi activities, lending arrangements, or borrowing against pledged digital assets. Our ability to maintain adequate liquidity depends on various factors including the market value of our digital assets, our ability to liquidate digital assets when needed, the parameters of our share repurchase program and our ongoing operating expenses.
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At March 31, 2026, we had negative working capital of approximately $33.0 million. At April 30, 2026, our cash balance was approximately $20.0 million. The Company believes this negative working capital position does not raise substantial doubt about its ability to continue as a going concern because of our significant digital asset holdings, access to our ATM facility, and our ability to liquidate digital assets as needed to meet our obligations.
From October 1, 2025 through April 30, 2026, we repurchased 12,390,000 shares for an aggregate cost of $65,427,000, inclusive of fees.
In February 2026, the Company entered into a Master Digital Currency Loan Agreement (the “Loan Agreement”) with Galaxy Digital LLC (“Galaxy LLC”), under which the Company may borrow digital assets and/or U.S. dollars from Galaxy LLC pursuant to individual loan term sheets (each, a “Loan”). The Loan Agreement establishes the general terms governing such loans, including procedures for loan requests, collateral requirements, borrow fees, callable and term loan structures, margin call and refund provisions, and rehypothecation rights, subject to mutual consent.
In connection with the Loan Agreement, from March through May 2026, the Company executed eight separate Loans in an aggregate amount of $80,000,000, all of which remains outstanding as of the filing date of this report. These Loans have a weighted average interest rate of 2.7% and maturity dates ranging from 7 days to 1 year, with $55,000,000 of these Loans having evergreen provisions allowing them to remain outstanding until repayment is requested by Galaxy LLC per the terms of the Loan Agreement. The Loans are secured by the Company’s fwdSOL, which Galaxy LLC has the right to sell, pledge or rehypothecate per the terms of the Loan Agreement.
On April 27, 2026, the Company invested approximately $2.2 million, through a combination of primary and secondary share purchases, as part of a $5.0 million equity round at a $25.0 million post-money valuation in On Re Ltd, a private tokenized reinsurance company on the Solana blockchain which is incorporated in England and Wales. A small portion of the investment remains subject to regulatory approval from the Bermuda Monetary Authority. In connection with the investment, the Company also committed to purchase up to $25.0 million of the ONyc token, which is built natively and trades exclusively on the Solana blockchain, and which will meaningfully expand On Re’s reinsurance underwriting capacity. The Company’s obligation to fund this commitment is subject to the terms and conditions set forth in the applicable investment documentation. If the Company fails to fund this commitment within thirty days of the applicable deadline, lead co-investors would have the right to acquire the Company’s equity stake in On Re at the original subscription price of approximately $2.2 million. The Company has evaluated this commitment in the context of its liquidity planning and believes it has adequate resources to fund this obligation, subject to market conditions.
If we have the opportunity to make other strategic acquisitions or investments in a product or partnership, we may require additional capital beyond our current cash balance to fund the opportunity.
Cash Flows
During the 2026 Period and 2025 Period, our sources and uses of cash were as follows:
Operating Activities
During the 2026 Period, cash used in operating activities of $12,728,000 resulted from a net loss of $868,733,000, non-cash net digital asset revenue of $25,093,000, an increase in prepaid expenses and other current assets of $1,673,000, and a decrease in accounts payable and related party payables of $530,000 partially offset by the loss on digital assets of $761,919,000, the digital asset impairment charge of $118,137,000, an increase in accrued expenses and other liabilities $2,009,000, non-cash charges for depreciation, amortization and share-based compensation of $864,000, and the net change in other operating assets and liabilities of $372,000.
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During the 2025 Period, cash used in operating activities of $972,000 resulted from a net loss of $2,160,000, a decrease in accrued expenses and other current liabilities of $153,000 and net cash used in discontinued operations of $92,000, partially offset by non-cash expenses of $462,000 related to depreciation, amortization, share-based compensation, credit loss expense and goodwill impairment and a decrease in accounts receivable and contract assets of $912,000 and the net change in other operating assets and liabilities of $59,000.
Investing Activities
Cash provided by investing activities in the 2026 Period consisted of proceeds from the sale of digital assets of $338,068,000, offset by purchases of digital assets of $335,977,000 and purchases of property and equipment of $3,000. Cash used in investing activities in the 2025 Period of $7,000 resulted from purchases of property and equipment.
Financing Activities
Cash used in financing activities in the 2026 Period consisted of share repurchases of $58,022,000, fees associated with financing activities of $230,000 and deferred financing costs associated with our ATM of $144,000, partially offset by proceeds from loans payable of $40,000,000, net proceeds from the ATM of $7,457,000 and proceeds from stock options exercised of $45,000. There was no cash used in or provided by financing activities in the 2025 Period.
Related Party Transactions
For information on related party transactions and their financial impact, see Note 8 to the unaudited condensed consolidated financial statements contained herein.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company, the Company is not required to provide the information called for by this Item.
| ITEM 4. | 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 March 31, 2026.
Changes in Internal Control
There were no changes in our internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. As of March 31, 2026, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business, financial condition, or results of operations.
| ITEM 1A. | RISK FACTORS |
Except as set forth below, there have been no material changes in our risk factors from those disclosed in the 2025 Form 10-K for the fiscal year ended September 30, 2025. The risk factors set forth below, together with those previously disclosed in our 2025 Form 10-K, constitute important cautionary statements and qualifications with respect to the forward-looking statements and other representations contained in this Quarterly Report on Form 10-Q. While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practicable under the circumstances, some level of risk and uncertainty will always be present. Item 1A - “Risk Factors” in the 2025 Form 10-K describes some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.
The Company has incurred significant indebtedness under a loan agreement with Galaxy Digital LLC, secured by the Company’s SOL holdings, to fund share repurchases and other corporate purposes. This strategy exposes the Company to substantial risks related to margin calls, failure to make interest payments, loan defaults, and forced liquidation of its collateral.
On February 27, 2026, the Company entered into a Master Digital Currency Loan Agreement (the “Loan Agreement”) with Galaxy Digital LLC (“Galaxy”), under which Galaxy may extend loans of digital currency or U.S. dollars (“Dollars”) to the Company in its sole discretion. The Company has used Dollar loan proceeds to repurchase shares of its common stock and other corporate purposes. These obligations are secured exclusively by the Company’s SOL holdings, over which Galaxy holds a first priority security interest. This strategy subjects the Company to significant risks that could materially adversely affect its financial condition, results of operations, and stock price.
SOL’s market price is highly volatile. If the value of the Company’s SOL collateral falls below the margin call rate, Galaxy may require additional collateral to restore the initial level within one business day. If collateral value falls below an urgent margin call rate, the Company may have as little as six hours to post additional collateral or repay outstanding principal. There is no assurance the Company will have sufficient SOL or other eligible assets to satisfy margin calls, acquire additional collateral, or pay down principal.
The Company may not generate sufficient cash flow to service its debt. Under the Loan Agreement, failure to repay borrowed amounts, make interest payments, pay fees, or provide additional collateral constitutes an event of default. Upon default, Galaxy may accelerate all amounts due, terminate the agreement, and liquidate, convert, or otherwise realize upon the pledged SOL without notice. Galaxy also has partial liquidation rights to restore the loan-to-value ratio if the Company fails to meet margin calls. Any liquidation could occur when SOL prices are depressed or markets are illiquid, resulting in significant losses. Galaxy may enter into hedging transactions, the costs and losses of which the Company would bear. Forced sales could also trigger adverse tax consequences.
The regulatory treatment of digital assets remains uncertain. If legal changes eliminate or materially impair a party’s ability to own or transfer digital currency used as collateral, the Company may be required to settle in Dollars at prices determined under the Loan Agreement, and the agreement would terminate. Such changes could impair the collateral’s value or restrict the Company’s ability to hold or transact in SOL.
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Because debt-funded share repurchases do not generate revenue or cash flow to service indebtedness, leverage amplifies these risks. The loan facility also contains termination triggers unrelated to payment defaults—including equity declines exceeding specified thresholds or changes in key management—that could allow acceleration of all outstanding obligations. In an extreme scenario, declining SOL values combined with margin call failures or a default could result in loss of all or substantially all SOL holdings, acceleration of indebtedness, and potential insolvency.
A default under the Company’s Loan Agreement could render the Company ineligible to use Registration Statement on Form S-3 for securities offerings, which would materially impair the Company’s ability to raise capital in the public markets.
The Company currently relies on the availability of Form S-3 registration statements under the Securities Act of 1933 (the “Securities Act”), to conduct primary and secondary offerings of its securities and to facilitate its share repurchase program. Eligibility to use Form S-3 is conditioned upon, among other things, the Company’s compliance with the timely filing requirements and other registrant eligibility conditions set forth in General Instruction I.B of Form S-3, including that the Company has not failed to pay any dividend or sinking fund installment on preferred stock, or defaulted on any installment on indebtedness for borrowed money, or on any material lease, since the end of the last fiscal year.
If the Company were to default on its obligations under the Loan Agreement -including any failure to make required interest or principal payments, satisfy margin calls, or comply with other covenants - such default could cause the Company to fail to satisfy the registrant eligibility requirements of Form S-3. In such event, the Company would be required to conduct any future public offerings of its securities on Form S-1, which is subject to more extensive disclosure requirements, longer SEC review periods, and greater time and expense to prepare. The loss of Form S-3 eligibility would significantly impair the Company’s flexibility to access the capital markets on a timely and cost-effective basis, which could adversely affect the Company’s ability to fund operations, pursue strategic opportunities, or respond to adverse business conditions.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Unregistered Sales
There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2026, that were not previously disclosed in a Current Report on Form 8-K.
Share Repurchases
In November 2025, the Company’s Board of Directors authorized a share repurchase program permitting the Company to purchase up to $1 billion of its common stock through September 30, 2027. Repurchases may be made from time to time through open-market purchases, block trades, and/or privately negotiated transactions (including accelerated share repurchases), and may include Rule 10b5-1 trading plans. Any repurchase will be executed in compliance with Rule 10b-18 of the Exchange Act. The Company may determine the timing, amount and method of repurchases based on market conditions, share price, legal and regulatory requirements, and other considerations in its sole discretion. The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended or terminated at any time.
During the three months ended March 31, 2026, the Company executed open market purchases of 3,050,000 shares at an average cost of $6.48 per share for an aggregate cost of $19,770,000, inclusive of fees, which was recorded as a component of treasury stock. During the six months ended March 31, 2026, the Company executed open market purchases of 4,591,000 shares at an average cost of $6.68 per share for an aggregate cost of $30,652,000, inclusive of fees, which was recorded as a component of treasury stock.
In addition to the open market purchases described above, in March 2026, the Company entered into a privately negotiated transaction with an institutional investor and related party pursuant to which the Company repurchased 6,164,324 shares of its common stock at a price of $4.44 per share for an aggregate cost of $27,370,000.
As of March 31, 2026, approximately $942.0 million remained available for future purchases under the share repurchase program.
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Issuer Purchases of Equity Securities
The following table summarizes our purchases of common stock in the three months ended March 31, 2026:
| Period | Total number of shares purchased | Weighted average price paid per share (1) | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs | ||||||||||||
| January 1, 2026 through January 31, 2026 | 1,790,235 | $ | 7.54 | 1,790,235 | $ | 975,612,749 | ||||||||||
| February 1, 2026 through February 28, 2026 | 596,904 | 5.31 | 596,904 | 972,445,791 | ||||||||||||
| March 1, 2026 through March 31, 2026 | 6,827,516 | 4.46 | 6,827,516 | 941,977,913 | ||||||||||||
| Total | 9,214,655 | 9,214,655 | ||||||||||||||
(1) The weighted average price paid per share includes broker commissions.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not Applicable.
| ITEM 5. | OTHER INFORMATION |
No officers, as defined in Rule 16a-1(f), or directors
| ITEM 6. | EXHIBITS |
The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this Form 10-Q.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Dated: May 14, 2026
| FORWARD INDUSTRIES, INC. | |
|
By: /s/ Michael Pruitt Michael Pruitt Interim Chief Executive Officer (Principal Executive Officer)
By: /s/ Mark Brazier Mark Brazier Chief Financial Officer (Principal Financial and Accounting Officer)
|
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EXHIBIT INDEX
| Incorporated by Reference |
||||||
| Exhibit No. |
Exhibit Description | Form | Date | Number | Filed or Furnished Herewith | |
| 2.1 | Agreement and Plan of Merger, dated as of March 4, 2026, by and between Forward Industries, Inc., a Texas corporation and Forward Industries, Inc., a New York corporation | 8-K | 3/9/26 | 2.1 | ||
| 3.1 | Certificate of Formation of Forward Industries, Inc. | 8-K | 3/9/26 | 3.1 | ||
| 3.2 | Bylaws of Forward Industries, Inc. | 8-K | 3/9/26 | 3.2 | ||
| 10.1 | 2021 Equity Incentive Plan* | 8-K | 12/23/20 | 4.1 | ||
| 10.1(a) | Amendment No. 1 to the 2021 Equity Incentive Plan* | S-8 | 9/18/25 | 4.2 | ||
| 10.1(b) | Amendment No. 2 to the 2021 Equity Incentive Plan* | 8-K | 3/9/26 | 10.1 | ||
| 10.2 | Securities Repurchase Agreement, dated March 18, 2026 | 8-K | 3/19/26 | 10.1 | ||
| 10.3 | Master Digital Currency Loan Agreement | 8-K | 3/19/26 | 10.2 | ||
| 10.4 | Offer Letter - Mark Brazier* | Filed | ||||
| 10.5 | Offer Letter - Ryan Navi* | Filed | ||||
| 31.1 | CEO Certifications (302) | Filed | ||||
| 31.2 | CFO Certifications (302) | Filed | ||||
| 32.1 | CEO and CFO Certifications (906) | Furnished | ||||
| 101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||
| 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 | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||
______________________
* Management compensatory agreement or arrangement.
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.; 111 Congress Avenue, Suite 500, Austin, TX 78701; Attention: Corporate Secretary.
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Exhibit 10.4
April 2, 2026
Mark Brazier
Via email
Dear Mark,
We are very pleased to extend an offer of employment (this “Offer”) to you for the position of Chief Financial Officer of Forward Industries, Inc., a Texas corporation (the “Company”) with an anticipated start date of April 13, 2026 (the “Effective Date”). This Offer is conditioned on your satisfactory completion of certain requirements, as more fully explained in this letter. Your employment is subject to the terms and conditions set forth in this letter.
1. Position, Responsibilities & Reporting: During your employment with the Company, you will serve as Chief Financial Officer for the Company, reporting to the Chief Investment Officer, (your “Manager”) of the Company. Your duties will include such duties as reasonably assigned to you by your Manager consistent with your position as Chief Financial Officer. You agree to devote your full business time, attention and best efforts to the performance of your duties and to the furtherance of the Company’s interests.
2. Employment Term; Location: Your employment will commence on the Effective Date and will continue “at will” until terminated by you or the Company, for any reason or no reason, subject to the terms of this Offer. Your principal place of employment will be your state of residence, and you will be expected to work remotely, subject to customary business travel as required in order to satisfy your duties to the Company.
3. Base Salary. In consideration of your services, you will be paid a base salary of $500,000 per year, payable in accordance with the standard payroll practices of the Company and subject to all withholdings and deductions as required by law.
4. Annual Bonus. For each fiscal year of the Company during your employment, you will be eligible to receive annual bonus (the “Annual Bonus”) with a target opportunity of $250,000. The Annual Bonus will be subject to the terms and satisfactory performance of conditions determined by you and your Manager and will be payable on the date annual bonuses are paid to other employees of the Company, subject to your continued employment in good standing with the Company through the applicable payment date.
5. Equity Incentives. In consideration for your services to the Company, you will be eligible to receive an equity award pursuant to the terms and conditions set forth on the Attachment to this Offer.
6. Benefits; Paid Time Off. You will be eligible to participate in the employee benefit plans and programs generally available to the Company’s employees, subject to the terms and conditions of such plans and programs. You will be entitled to paid vacation in accordance with the Company’s policies in effect from time to time. The Company reserves the right to amend, modify or terminate any of its benefit plans or programs at any time and for any reason.
7. Termination of Employment.
| 1 |
Notice of Termination. Except in the case of a termination for Cause, either party may terminate your employment by providing the other party with at least ninety (90) days' prior written notice (the “Notice Period”). During the Notice Period, you shall continue to receive your then-current base salary and all employee benefits to which you are entitled under this Offer, and shall remain available to perform such transitional services as the Company may reasonably request consistent with your position. Notwithstanding the foregoing, the Company may, in its sole discretion, elect to place you on garden leave during all or any portion of the Notice Period, during which you shall be relieved of your duties and responsibilities but shall continue to receive your base salary and benefits for the remainder of the Notice Period. If the Company terminates you without Cause, the Company may also elect to pay you, in a lump sum within fourteen (14) days following termination, an amount equal to your then-current base salary for the remainder of the Notice Period in lieu of such notice (“Pay in Lieu of Notice”). The Notice Period (or any Pay in Lieu of Notice) shall be offset against or reduce, any Severance Benefits or other payments to which you may be entitled under this agreement. For the avoidance of doubt, in the case of a resignation for Good Reason, the ninety (90) day Notice Period shall run from the date you deliver written notice of resignation to the Company following the expiration of the Company’s cure period under Section 7(d).
| a. | If your employment is terminated by you without Good Reason, or by the Company with Cause, you will only be eligible to receive any accrued but unpaid wages through the date of termination, any vested benefits under the Company’s employee benefit plans and reimbursement of business expenses properly incurred in accordance with Company policy. | |
| b. | If the Company terminates your employment without Cause or you resign for Good Reason the Company will: (i) pay you a lump sum payment equal to six months of your annualized base salary on the date of termination (or, in the event a reduction in Salary is a basis for termination for Good Reason, then the Salary in effect immediately prior to such reduction) and a pro rata share of your annual target bonus , within fourteen days after the Release (defined below) becomes effective (except as necessary to comply with Section 409A, as set forth in Paragraph 9 below, in which case payment shall be made on the first business day following the six-month anniversary of your separation); and (ii) if you timely elect to continue your group health benefits under the Consolidated Omnibus Reconciliation Act or applicable state law (collectively referred to as “COBRA”), the Company shall pay your COBRA premiums for the twelve- month period following the termination of your employee group health benefits (the foregoing collectively referred to a “Severance Benefits”). The foregoing provisions shall prevail over the provisions of the Plan (defined below) and of any award agreement. | |
| c. | In the event your employment is terminated without Cause or you resign for Good Reason and, as a result, your employment terminates within 12 months after a Change in Control of the Company, as that term is defined in the Company’s 2021 Equity Incentive Plan, then the vesting of all time based-equity and option grants shall accelerate and all such unvested equity and option grants shall vest at the time of the Change in Control. The foregoing provisions shall prevail over any contrary provisions of the Plan (defined below) and of any award agreement issued by the Plan. | |
| d. | For purposes of this Agreement, “Cause,” shall mean: (i) your commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States, any state thereof, or any applicable foreign jurisdiction; (ii) your attempted commission of, or participation in, a fraud or act of dishonesty against the Company or any Affiliate; (iii) your material breach of this Agreement, provided such breach is not cured within thirty (30) days of your receipt of written notice specifically describing the alleged breach; or (iv) your unauthorized use or disclosure of the Company's or any Affiliate's confidential information or trade secrets; or (v) your gross misconduct. | |
| e. | For purposes of this Agreement, “Good Reason” shall mean: (i) the Company’s material breach of this Agreement including any material failure to pay any salary or bonus, provide any employee benefit or make any grant required under this Agreement; (ii) any reduction in your base salary or target bonus; (iii) material diminution of your duties or title; (iv) any material change in your principal place of employment or in the expectation that you will work remotely, as set forth in Paragraph 2. In order to resign for Good Reason, you must give written notice to the Company specifically describing any Good Reason condition within ninety (90) days of when it first arises, allow the Employer thirty (30) days to cure such condition, and, if Employer fails to timely cure such condition, resign your employment effecting within fourteen (14) days after the end of the 30-day cure period. If you fail to terminate your employment within 14 days after the end of the cure period, you will be deemed to have waived the Good Reason condition(s) of which you gave the Company notice. |
| 2 |
| f. | In order to receive the Severance Benefits, you must sign a general release agreement waiving all claims you may have against the Company arising from or concerning your employment or the termination thereof (the “Release”) except any rights to any vested benefits under any benefit plan including the Plan or any successor Plan, any claims that cannot be waived by law, or any claims or rights to indemnification, or insurance, from the Company, under the Company’s articles of incorporation, bylaws, or any agreement with the Company. | |
| g. | Your employment shall terminate immediately upon your death or Disability. Upon such termination, you, your estate, or your beneficiaries, as the case may be, shall be entitled to received, and their sole remedies under this Agreement shall be: |
| (i) | any earned and unpaid salary accrued through the date of termination, payable in a lump sum not later than 14 days following your termination of employment; | |
| (ii) | compensation for any unused vacation days accrued in the fiscal year in which termination occurs through the date of termination, payable as in clause (i) of this Section; | |
| (iii) | any unpaid benefits accrued through the date of termination that may be due to you under an employee benefit plan or programs of the Company, payable in accordance with the terms of such plans or programs of the Company, together with any documented, unreimbursed business expenses, payable in according with Company policies; and | |
| (iv) | provided the Release becomes fully effective and non-revocable by its terms (which may be executed upon your death or Disability by your executor or estate, as applicable), any stock options, grants of Common Stock, restricted share grants or other benefits under any of the Company compensation plans that were vested as of 5:00 PM New York time on the date immediately prior to the date of termination, may be exercised (in the case of options) or delivered (in the case of restricted stock) in accordance with the terms of such plans and any applicable plan award agreements with you. | |
| (v) | For purposes of this Agreement, the term “Disability” shall mean any disability, illness, or other incapacity that prevents you from performing services, for 60 or more consecutive days, or for an aggregate of 90 days in any consecutive 12-month period. In such event, the Company shall have the right to terminate this Agreement upon 10 days’ prior written notice to you. During the period of any such disability, illness, or incapacity, (i) the obligation of the Company to pay Salary to you shall be reduced to the extent of any amount received by you pursuant to any disability insurance policy maintained and paid for by the Company, and (ii) no bonus compensation or other employee benefits shall accrue or be earned or count toward proration. Termination under this Section shall not prejudice any rights you have under disability policies, if any, being maintained by the Company for you under the terms of this Agreement. |
8. Restrictive Covenants; Arbitration. As a condition to your employment, you will be required to submit to a customary background check and references, and execute (and not revoke) a restrictive covenants agreement attached hereto as Attachment A (the “Attachment”), which will include customary terms, including with respect to confidentiality and assignment of intellectual property rights. You and the Company agree that all disputes or claims arising under this Offer or otherwise related to your employment with the Company will be subject to final, binding and confidential arbitration held in Austin, Texas and conducted by JAMS Mediation, Arbitration and ADR Service under its rules and procedures, and the arbitrator will have the right to compel adequate discovery and award relief as permitted by law. You and the Company mutually waive your rights to resolve any such disputes through trial by jury, judge or administrative proceeding. Each party will bear its own costs, including legal fees, related to the arbitration and one-half of the costs of the arbitrator. Notwithstanding the foregoing, you and the Company will be permitted to seek injunctive relief in court in order to prevent irreparable harm pending the conclusion of any such arbitration, you will not be required to arbitrate any claims which by law cannot be the subject of a compulsory arbitration agreement, and nothing precludes you from filing charges with the federal EEOC or similar state or local agency.
9. Taxes. Your compensation and benefits received from the Company or any of its affiliates will be subject to applicable tax withholding and deductions. If you were to receive any payment or benefit from the Company or any of its affiliates that would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code (the “Code”), then, to the extent any excise tax under Section 4999 of the Code applies to such payment or benefit, the payment or benefit will be reduced to an amount that would result in no such excise tax, only if the after-tax amount is greater to you than if no reduction had occurred (after taking into account all applicable taxes). Payments provided to you under this Offer are intended to be either exempt from or comply with Section 409A of the Code (“Section 409A”) and will be interpreted accordingly, and any payments or benefits provided to you in installments will be deemed to be separate payments for purposes of Section 409A. To the extent necessary to avoid the imposition of an excise tax under Section 409A, any payments or other benefits provided to you may be paid no earlier than six months and one day after your separation from service (or earlier upon your death), and all payments that constitute deferred compensation under Section 409A and are payable to you upon your termination of employment shall only be paid if your termination constitutes a “separation from service” under Section 409A.
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10. Indemnification and Liability Insurance. The Company shall indemnify and cover you under the Company’s directors’ and officers’ liability insurance during the Term in the same amount and to the same extent as the Company indemnifies and covers its other officers and directors.
11. Notices. Any notice permitted or required hereunder shall be in writing and shall be deemed to have been given on the date of delivery or, if mailed by certified mail, postage prepaid, return receipt requested, documented overnight courier, or by email, on the date mailed or emailed.
| (i) | If to you: | |
| Mark Brazier (if delivered by any other physical means). | ||
| Email: markcbrazier@gmail.com |
| (ii) | If to the Company: | |
The Company’s then corporate headqurters Email: legal@forwardindustries.com |
12. Clawback. Any amounts payable hereunder are subject to the Company’s Clawback Policy, as filed here https://www.sec.gov/Archives/edgar/data/38264/000168316824009011/forward_ex9700.htm and amended from time to time. The Company will make any determination for clawback or recovery in its sole discretion and in accordance with any applicable law or regulation.
13. Assignment; Entire Agreement: This Offer is assignable solely by the Company, including to any of its affiliates. This Offer, together with the Attachment, constitutes the entire agreement and understanding between you and the Company and supersedes any prior understandings, agreements or representations.
14. Amendment; Termination; Severability; Counterparts: This Offer may only be amended by mutual written agreement between you and the Company. Any provision of this Offer, or the Attachment, that is held to be invalid, illegal or unenforceable shall not affect the validity, legality and enforceability of any remaining provisions. This Offer may be executed in counterparts, including by electronic signature, each which will constitute the same instrument.
15. Governing Law; Consent to Jurisdiction; Jury Trial Waiver: This Covenant Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Texas without reference to the principles of conflicts of law of the State of Texas or any other jurisdiction, and where applicable, the laws of the United States. The Employee hereby agrees that any actions or proceedings brought by the Employee relating to this Covenant Agreement must be brought in the courts situated in Austin, Texas. The Employee hereby irrevocably submits to the exclusive jurisdiction of such courts and waives the defense of forum non conveniens (i.e., inconvenient forum) to the maintenance of any such action or proceeding in such venue. THE EMPLOYEE KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM WITH REGARD TO ANY DISPUTE THAT MAY ARISE BETWEEN THE EMPLOYEE AND THE COMPANY, AND REPRESENTS AND WARRANTS THAT THE EMPLOYEE HAS CONSULTED WITH COUNSEL OF THE EMPLOYEE’S CHOICE REGARDING THIS WAIVER OR HAS CHOSEN VOLUNTARILY NOT TO DO SO.
We are excited at the prospect of you joining our team. If you have any questions about the above details, please call me immediately. If you wish to accept this position, please sign below and return this letter.
Yours sincerely,
Forward Industries, Inc.
/s/ Michael Pruitt
By: Michael Pruitt
Title: Interim Chief Executive Officer
Mark Brazier
/s/ Mark Brazier
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ATTACHMENT
In consideration for your services to the Company, you will be eligible to receive certain grants of equity awards under the Company’s 2021 Equity Incentive Plan (as may be amended or restated from time to time, the “Plan”) in accordance with the terms and conditions set forth below.
| Approvals: |
All grants of equity awards will be subject to: (i) approval by the Board or a duly authorized committee of the Board; (ii) the availability of sufficient shares of the Company’s common stock (“Shares”) under the Plan or approval by the stockholders of the Company of an amendment to the Plan increasing the number of Shares available for issuance under the Plan; and (iii) your execution of any award agreements or other documentation reasonably required by the Company. |
| Stock Options: |
Subject to the conditions set forth above, you will be eligible to receive two grants of options to purchase Shares (“Options”) as set forth below: (i) Options for 137,500 shares of the Company’s common stock with an exercise price per Share equal to 200% of the Fair Market Value of a Share. (ii) Options for 137,500 shares of the Company’s common stock with an exercise price per Share equal to 300% of the Fair Market Value of a Share. The Options will vest 25% on the first anniversary of the grant date and in 12 equal quarterly installments thereafter and will have a 10-year term. |
| RSUs: |
Subject to the conditions set forth above, you will be eligible to receive a 275,000 restricted stock units with respect to Shares (“RSUs”). The RSUs will vest 25% on the first anniversary of the grant date and in 12 equal quarterly installments thereafter. |
| PSUs: |
Subject to the conditions set forth above, you will be eligible to receive two grants of performance-vesting RSUs (“PSUs”) as set forth below: (i) 137,500 PSUs that vest, if at all, subject to the Company holding 0.075 SOL per Share outstanding (as defined in the grant documentation). (ii) 137,500 PSUs that vest, if at all, subject to the Company holding 0.090 SOL per Share outstanding (as defined in the grant documentation). |
| Changes in Capitalization: | In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase, other reorganization or corporate transaction or event, special or extraordinary dividend or other extraordinary distribution, stock split, reverse stock split, subdivision, consolidation, combination or exchange of shares or another change in corporate structure affecting the common stock of the Company, the number and kind of securities subject to the Options, RSUs and PSUs, strike prices applicable to the Options and the performance goals applicable to the PSUs will be equitably substituted or proportionately adjusted. |
| Other Terms and Conditions: | All awards vest subject to your continued employment with the Company on the applicable vesting date. All other terms and conditions applicable to the Options, RSUs and PSUs described herein will be subject to the terms of the Plan and the applicable award agreement. |
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ATTACHMENT
Covenant Agreement
Mark Brazier (the “Employee”) enters into this Restrictive Covenants Agreement (this “Covenant Agreement”) as a condition of employment with Forward Industries, Inc. (the “Company”). In consideration of, and as a condition of, the Employee’s access to Confidential Information (as defined below), the Employee’s employment with the Company, and any cash or equity compensation for the Employee’s services, the Employee hereby agrees to the following:
1. Confidentiality. The Employee understands that during the Employee’s employment with the Company, the Employee will have access to Confidential Information (as defined below). The Employee agrees to observe all Company policies and procedures concerning such Confidential Information, and not to disclose or use, either during the Employee’s employment with the Company or at any time thereafter, any Confidential Information unless authorized to do so by the Company in writing, except that the Employee may disclose and use such information (i) when necessary in the performance of the Employee’s duties for the Company, (ii) as permitted by Section 14 below, and (iii) as otherwise required by law. “Confidential Information” means any information developed by the Employee in connection with Employee’s employment by the Company, delivered by or for the Company and its affiliates or, to the extent disclosed to the Employee as a result of the Employee’s employment, information of a third party (including any client of the Company or its affiliates), that is not generally known to or available for use by the public, including, without limitation, technical and nontechnical information, research and development, finances, strategic or financial plans and data, business plans, methods, processes, customer and supplier information, formulas, techniques, operations, marketing plans, sales information, intellectual property, computer programs and systems, computer technology, manuals, technology, prices, costs, processes, materials of construction, trade secrets and equipment designs, and other information created by the Employee or disclosed to the Employee by the Company or an affiliate, or a third party (including information disclosed to the Company by others under agreements to hold such information confidential), in confidence, directly or indirectly, and whether in writing, verbally, or by electronic records, pictures, drawings or inspection of tangible property.
2. Mutual Non-Disparagement. Subject to Section 14, the Employee and the Company’s Executives may not, either during or at any time subsequent to the Employee’s employment with the Company, directly or indirectly, engage in any conduct or make any statement disparaging in any way the business or reputation of the other party, or any goods or services offered by the Company including, but not limited to, by making any such statements, anonymously or with attribution, through any publication including, but not limited to, print, social media, television or otherwise.
3. Full-Time Commitment. Consistent with Employee’s full-time position, Employee will not provide any services of any kind to any third party without the Company’s written consent.
4. [Reserved.]
5. Non-Solicitation of Customers. The Employee agrees that during the Restricted Period the Employee shall not directly or indirectly (including by assisting or aiding any third party), (i) solicit the business of or perform any services that the Employee provided to the Company or its subsidiaries during the then-immediately preceding twenty-four (24) month period ending no later than the termination of the Employee’s employment with the Company for any reason, for any actual customer, any person or entity that has been a customer within the twelve (12) month period preceding the date of such solicitation, any actively solicited prospective customer, or any person, company or business that is or was an investor of the Company or its affiliates, in each case, as to whom or which the Employee provided any services or as to whom or which the Employee has knowledge of Confidential Information, (ii) encourage or assist any Competing Business to solicit or service any actual customer, any person or entity that has been a customer within the twelve (12) month-period preceding the date of such solicitation or any actively solicited prospective customer of the Company, or a subsidiary, in each case, as to whom or which the Employee provided any services or as to whom the Employee has knowledge of Confidential Information, or otherwise seek to encourage or induce any such customer to cease doing business with, or lessen its business with, the Company or a subsidiary, or (iii) otherwise knowingly interfere with or damage (or attempt to knowingly interfere with or damage), or take action that would reasonably be expected to interfere with or damage, the Company’s relationship with its customers as to whom the Employee provided any services or as to whom the Employee has knowledge of Confidential Information; provided, however, that, following the termination of the Employee’s employment, the Employee is not precluded from soliciting the business of or performing any services for any such customer with whom or which the Employee had a business relationship prior to the Employee’s employment with the Company.
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6. Non-Solicitation of Employees. The Employee agrees that during the Restricted Period, the Employee shall not, directly or indirectly (including by assisting or aiding any third party), (i) solicit, recruit or induce any employee of the Company, or a subsidiary, to terminate employment with the Company, or a subsidiary, or (ii) either individually or as owner, agent, employee, director, manager, officer, consultant or otherwise, employ, offer employment to or otherwise interfere with the employment relationship of the Company with any person who at the time of such action is an employee of the Company, or a subsidiary, and in each case, who developed or obtained Confidential Information while employed by the Company or with whom the Employee did business; provided, however, that, following the termination of the Employee’s employment, the Employee is not precluded from initiating or directing a general employment solicitation that is not directed primarily at the foregoing employees.
7. Use of Company Technology. The Company’s electronic mail system, internet subscription and all other data systems are the exclusive property of the Company. The Employee agrees that, with the exception of occasional incidental use, the Company’s electronic mail system, internet subscription and all other data systems shall be used by the Employee solely in connection with the Employee’s work for the Company. The Employee acknowledges that the Employee shall have no right to access and shall not access the Company’s electronic mail system or other data systems after termination of employment.
8. Intellectual Property.
(a) Disclosure of Inventions. Without further compensation, the Employee shall promptly disclose to the Company all inventions, improvements, ideas, know-how, trademarks, service marks, trade dress, domain names, logos, designs, copyrightable subject matter, original works of authorship, techniques, methods, formulas, processes, compositions of matter, computer code, software, technologies, compilations, discoveries, data, documents, trade secrets and other work product of any nature whatsoever and matters or things protectable under principles of intellectual property law and relating in any way to the business or contemplated business, research or development of the Employer (regardless of when or where the Invention is prepared or whose equipment or other resources are used in preparing the same), whether or not patentable, copyrightable, or protectable as trade secrets, and all intellectual property rights therein, that that the Employee creates, makes, conceives of, develops, improves or reduces to practice, either alone or jointly with others, at any time during the Employee’s period of employment (whether or not during working hours or inside the Company’s premises, or made with the use of the Company’s information, trade secrets, time, materials, facilities, employees or advisors) (“Inventions”).
(b) Works Made for Hire; Assignment of Inventions. The Employee acknowledges and agrees that, to the extent permitted by law, all original works of authorship made by the Employee (solely or jointly) within the scope of the Employee’s employment with the Company that are protectable by copyright are “works made for hire” as defined in the United States Copyright Act (17 U.S.C.A. § 101), and such copyrights are therefore owned by the Company. To the extent any Inventions are not works made for hire, the Employee hereby irrevocably assigns to the Company (for no additional consideration), in perpetuity and without any limitation or reservation of rights, all of the Employee’s right, title and interest throughout the world in, to and under any and all such Inventions, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world, and acknowledges that such Inventions are and shall be the sole and exclusive property of the Company. To the extent any copyrights are assigned under this Covenant Agreement, the Employee hereby irrevocably waives, to the extent permitted by applicable law, any and all claims the Employee may now or hereafter have in any jurisdiction to all rights of paternity, integrity, disclosure, and withdrawal and any other rights that may be known as “moral rights” with respect to all Inventions
(c) Prior Creations. The Employee has attached hereto, as Annex 1, a complete list describing with particularity any intellectual property (including patent applications and issued patents, original works of authorship, trademarks, service marks, logos, trade dress, domain names, designs, formulae, processes, methods, developments, concepts, know-how, improvements and trade secrets) that were conceived, reduced to practice, made, developed or created by the Employee before the effective date of this Covenant Agreement and which relate to the business or contemplated business or actual or demonstrably anticipated research or development of the Company (“Prior Creations”). Such Prior Creations shall be excluded from the assignment in Section 8(b). The Employee hereby agrees not to incorporate or provide or deliver for use any Prior Creations owned by the Employee or in which the Employee has an interest into a Company product, service or process, without the Company’s prior written consent. Without limiting the foregoing, if the Employee incorporates or provides or delivers for use a Prior Creation into a Company product, service or process, the Employee shall and hereby does grant to the Company a perpetual, non-exclusive, royalty-free, irrevocable, worldwide, transferable and sub-licensable license to any intellectual property rights in such Prior Creation to make, have made, modify, use, sell and otherwise exploit any such Company product, service or process which in any way incorporates such Prior Creation. If no such list is attached to Annex 1, then the Employee represents that there are no such Prior Inventions.
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(d) Further Assurances; Power of Attorney. During and after the Employee’s employment, the Employee agrees to reasonably cooperate with the Employer at the Company’s expense to (i) apply for, obtain, perfect and transfer to the Company the Inventions in any jurisdiction in the world; and (ii) maintain, protect and enforce the same, including, without limitation, executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments and other documents and instruments as may be requested by the Company. The Employee hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Employee’s behalf in the Employee’s name and to do all other lawfully permitted acts to transfer the Inventions to the Company and further the transfer, issuance, prosecution and maintenance of all intellectual property rights therein, to the full extent permitted by law, if the Employee does not promptly cooperate with the Company’s request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be impacted by the Employee’s subsequent incapacity.
(e) Security and Access. The Employee agrees and covenants (i) to comply with all Company security policies and procedures as in force from time to time, including without limitation those regarding computer equipment, telephone systems, voicemail systems, facilities access, monitoring, key cards, access codes, Company intranet, internet, social media and instant messaging systems, computer systems, email systems, computer networks, document storage systems, software, data security, encryption, firewalls, passwords and any and all other Company IT resources and communication technologies (“Facilities and Information Technology and Access Resources”); (ii) not to access or use any Facilities and Information Technology and Access Resources except as authorized by the Company; and (iii) not to access or use any Facilities and Information Technology and Access Resources in any manner after the termination of the Employee’s employment by the Company, whether termination is voluntary or involuntary. The Employee agrees to notify the Company promptly in the event the Employee learns of any violation of the foregoing by others, or of any other misappropriation or unauthorized access, use, reproduction or reverse engineering of, or tampering with any Facilities and Information Technology and Access Resources or other Company property or materials by others.
9. Return of Property. Upon termination of employment for any reason, the Employee shall promptly deliver to the Company all Company property in the Employee’s possession, custody or control belonging to the Company, including, but not limited to, keys, security and computer passwords, mobile phones, computer equipment, Inventions (and any materials that embody or include the Inventions), Confidential Information developed by the Employee or others, original and copy documents or other media on which information is held in the Employee’s possession relating to the business or affairs of the Company and any other property belonging to the Company which the Employee obtained in the course of the Employee’s engagement by the Company (including any documents or other materials containing confidential information or embodying or including Inventions), and the Employee agrees not to retain copies of any such materials. To the extent the Employee has any of the foregoing documents in the Employee’s possession, custody or control in electronic form (for example, in the Employee’s personal cloud storage or email account or on a personal computer), the Employee agrees to identify such documents to the Company, to deliver identical copies of such documents to the Company (if the Company so requests) and to follow the Company’s instructions regarding the permanent deletion or retention of such documents. The requirements of this Section 9 shall not apply to publicly available documents or documents relating directly to the Employee’s compensation. The property and documents which must be returned to the Company pursuant to this Section 9 must be returned whether in the Employee’s possession, work area, home, vehicle, the possession of an employee or contractor of the Employee or in the wrongful possession of any third party with the Employee’s knowledge or acquiescence, and whether prepared by the Employee or any other person or entity. The Employee agrees that he will sign a certification, affidavit or such other document representing that the Employee has fulfilled the obligations of this Section 9, as the Company may request, and deliver it to the Company.
10. Data Privacy. In order to manage the Employee’s employment, the Company will need to process certain personal data relating to the Employee. Information regarding which personal data is being processed, how such personal data is being processed and which rights the Employee has in this regard, is outlined on the Company’s internal policy. The Employee is responsible for familiarizing himself or herself with the applicable content of such policy.
11. Cooperation. Following the termination of employment, without limitation to Section 8(d), the Employee shall provide reasonable cooperation in connection with any action or proceeding which relates to events occurring during the Employee’s employment with the Company. The Company shall reimburse reasonable out-of-pocket expenses incurred by the Employee as a result of such cooperation, provided that such expenses have been approved by the Company, in writing, in advance.
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12. Remedies. The Employee acknowledges and agrees that a violation or threatened violation of any of the Employee’s obligations under this Covenant Agreement will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, the Employee agrees that the Company shall be entitled to seek an injunction, restraining order or such other equitable relief (without the requirement to post bond) restraining the Employee from committing any violation of the covenants or obligations contained in this Covenant Agreement. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity in connection with this Covenant Agreement.
13. Modification. If any provision of this Covenant Agreement is deemed invalid, illegal or unenforceable by a court of competent jurisdiction, then the validity or enforceability of the other provisions of this Covenant Agreement will not be impaired or affected. If any provision of this Covenant Agreement is deemed invalid, illegal or unenforceable as to its scope, then notwithstanding such invalidity, that provision will be deemed valid to the fullest extent permitted by law. The parties agree that, if any court of competent jurisdiction makes a final judicial determination that the duration, scope or any other restriction contained in this Covenant Agreement is unenforceable against the Employee, the court will have the power to modify the duration, scope and/or other restriction of such provision and/or to delete specific words and phrases and, in its reduced or revised form, such provision will then be enforceable as permitted by law. The existence of any claim or cause of action by the Employee against the Company, whether predicated on this Covenant Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants contained in this Covenant Agreement.
14. Permitted Disclosures.
(a) The Employee understands that the Employee will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a Federal, State or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. The Employee will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
(b) Nothing in this Covenant Agreement or any other agreement the Employee may have with the Company shall prohibit or restrict the Employee from (a) voluntarily communicating with an attorney retained by the Employee, (b) voluntarily communicating with or testifying before any law enforcement or government agency, including the Securities and Exchange Commission (“SEC”), the National Labor Relations Board (“NLRB”), the United States Department of Labor, the Equal Employment Opportunity Commission, any state or federal attorney general, or any other state or local commission on human rights, or any self-regulatory organization, or otherwise initiating, assisting with, or participating in any manner with an investigation conducted by such government agency, in each case, regarding possible violations of law and without advance notice to the Company, (c) seeking and obtaining payment or an award from the SEC, pursuant to Section 21F of the Securities Exchange Act of 1934, as amended, or obtaining any other “whistleblower” award, to the extent such right cannot by law be waived, (d) disclosing any information (including, without limitation, Confidential Information) to a court or other administrative or legislative body in response to any subpoena, court order or written request, provided that with respect to any subpoena, court order or written request on behalf of any non-governmental person, the Employee uses commercially reasonable efforts to cooperate with any effort by the Company to seek to challenge the subpoena, court order or written request on behalf of any non-governmental person or obtain a protective order limiting its disclosure, or other appropriate remedy, (e) filing or disclosing any facts necessary to receive unemployment insurance, Medicaid or other public benefits to which the Employee is entitled, (f) disclosing the underlying facts or circumstances relating to claims of discrimination, in violation of laws prohibiting discrimination, against the Company or making truthful statements or disclosures related to unlawful discrimination, harassment or retaliation, or otherwise discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Employee has reason to believe is unlawful, (g) enforcing the Employee’s Section 7 rights under the National Labor Relations Act, participating in Section 7 activity (including the right to communicate with former coworkers and/or third parties about terms and conditions of employment or labor disputes) or otherwise cooperating through investigation, testimony, or otherwise with the National Labor Relations Board, the Securities and Exchange Commission or any other administrative agency or court, or (h) disclosing or discussing conduct, or the existence of a settlement involving conduct, relating to a dispute: (i) involving a nonconsensual sexual act or sexual contact, as such terms are defined in § 2246 of title 18, United States Code, or similar applicable Tribal or State law, including when the victim lacks capacity to consent; or (ii) relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal or State law.
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15. Enforcement. The Employee expressly agrees and acknowledges that the restrictions contained in this Covenant Agreement do not impose unreasonable limitations on such party. If, at the time of enforcement of any of the restrictions contained in this Covenant Agreement, a court of competent jurisdiction or an arbitrator shall hold that the duration, scope or area restrictions stated herein are invalid, illegal or unenforceable under circumstances then existing, the parties hereto agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. The Employee expressly acknowledges and agrees that the restrictions contained herein are reasonable in terms of duration, scope and area restrictions and are necessary to protect the confidential information and the goodwill of the business of the Company Group, and the Employee agrees not to challenge the validity or enforceability of the restrictions contained herein.
16. Assignment; Entire Agreement. This Covenant Agreement shall inure to the benefit of the successors, assigns, parent corporations, subsidiaries, affiliates and purchasers of the Company. The Company may assign, in whole or in part, its rights under this Covenant Agreement to a third party without the Employee’s consent. The Employee may not assign Employee’s duties or obligations hereunder. This Covenant Agreement and the Employee’s offer letter with the Company together contain the entire agreement between the Employee and the Company with respect to the subject matter of this Covenant Agreement and the Employee’s offer letter, and supersede any and all prior agreements, discussions, covenants, representations and understandings, whether oral or written, between the Employee and the Company with respect to the subject matter of this Covenant Agreement and the Employee’s offer letter.
17. Modifications and Waivers. The failure of a party to enforce at any time the provisions of this Covenant Agreement or to require at any time performance by any other party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Covenant Agreement or any part hereof, or the right of any party to enforce each and every provision in accordance with its terms.
18. Governing Law; Consent to Jurisdiction; Jury Trial Waiver. This Covenant Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Texas without reference to the principles of conflicts of law of the State ofTexasor any other jurisdiction, and where applicable, the laws of the United States. You and the Company hereby agree that any actions or proceedings brought by either party seeking injunctive relief pursuant to this Covenant Agreement must be brought in the courts situated in Austin, Texas. The parties hereby irrevocably submits to the exclusive jurisdiction of such courts and waives the defense of forum non conveniens (i.e., inconvenient forum) to the maintenance of any such action or proceeding in such venue. Nothing in this Paragraph 18 limits or modifies the arbitration provision in Section 8 of the Offer Letter and disputes arising under this Covenant Agreement shall be subject to the arbitration provision except to the extent injunctive or other equitable relief is sought under Section 12. THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM WITH REGARD TO ANY DISPUTE THAT MAY ARISE BETWEEN THE EMPLOYEE AND THE COMPANY, AND REPRESENTS AND WARRANTS THAT THE EMPLOYEE HAS CONSULTED WITH COUNSEL OF THE EMPLOYEE’S CHOICE REGARDING THIS WAIVER OR HAS CHOSEN VOLUNTARILY NOT TO DO SO.
| Date: | 4/2/2026 | /s/ Mark Brazier | ||
| Mark Brazier |
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Exhibit 10.5
FORWARD INDUSTRIES, INC.
November 28, 2025
Ryan Navi
Via email
Dear Ryan,
We are very pleased to extend an offer of employment (this “Offer”) to you for the position of Chief Investment Officer of Forward Industries, Inc., a New York corporation (the “Company”) with an anticipated start date of December 1, 2025 (the “Effective Date”). This Offer is conditioned on your satisfactory completion of certain requirements, as more fully explained in this letter. Your employment is subject to the terms and conditions set forth in this letter.
1. Position, Responsibilities & Reporting: During your employment with the Company, you will serve as Chief Investment Officer of the Company, reporting to the Interim Chief Executive Officer and the Board of Directors of the Company (the “Board”) until such time as a permanent chief executive officer commences employment with the Company, after which you will report exclusively to the Chief Executive Officer. Your duties will include such duties as reasonably assigned to you by the Chief Executive Officer or the Board consistent with your position as Chief Investment Officer. You agree to devote your full business time, attention and best efforts to the performance of your duties and to the furtherance of the Company’s interests.
2. Employment Term; Location: Your employment will commence on the Effective Date and will continue “at will” until terminated by you or the Company, for any reason or no reason, subject to the terms of this Offer. Your principal place of employment will be your state of residence, and you will be expected to work remotely, subject to customary business travel as required in order to satisfy your duties to the Company.
3. Base Salary. In consideration of your services, you will be paid a base salary of $400,000 (four hundred thousand dollars) per year, payable in accordance with the standard payroll practices of the Company and subject to all withholdings and deductions as required by law.
4. Annual Bonus. For each fiscal year of the Company during your employment, you will be eligible to receive annual bonus (the “Annual Bonus”) with a target opportunity of $200,000 (two hundred thousand dollars). The Annual Bonus will be subject to the terms and performance conditions determined by the Board or a duly authorized committee of the Board and will be payable on the date annual bonuses are paid to other executive officers of the Company, subject to your continued employment in good standing with the Company through the applicable payment date.
5. Equity Incentives. In consideration for your services to the Company, you will be eligible to receive an equity award pursuant to the terms and conditions set forth on the Attachment to this Offer.
6. Benefits; Paid Time Off. You will be eligible to participate in the employee benefit plans and programs generally available to the Company’s executives, subject to the terms and conditions of such plans and programs. You will be entitled to paid vacation in accordance with the Company’s policies in effect from time to time. The Company reserves the right to amend, modify or terminate any of its benefit plans or programs at any time and for any reason.
7. Termination of Employment. If your employment is terminated by you without Good Reason, or by the Company with Cause, you will only be eligible to receive any accrued but unpaid wages through the date of termination, any vested benefits under the Company’s employee benefit plans and reimbursement of business expenses properly incurred in accordance with Company policy.
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a. If the Company terminates your employment without Cause or you resign for Good Reason the Company will: (i) give you a severance of (x) $500,000.00 if your employment is terminated within one year of the Effective Date; or (y) an amount equal to six months of your then applicable base salary plus one-half the amount of your bonus for the preceding year, if your employment is terminated thereafter, in a lump sum within fourteen days after the Release (defined below) becomes effective; and (ii) if you timely elect to continue your group health benefits under the Consolidated Omnibus Reconciliation Act or applicable state law (collectively referred to as “COBRA”), the Company shall pay your COBRA premiums for the twelve-month period following the termination of your employee group health benefits (the foregoing collectively referred to a “Severance Benefits”). The foregoing provisions shall prevail over the provisions of the Plan (defined below) and of any award agreement.
b. In the event your employment is terminated without Cause or you resign for Good Reason and, as a result, your employment terminates within 12 months after a Change in Control of the Company, as that term is defined in the Company’s 2021 Equity Incentive Plan, then the vesting of all time based-equity and option grants shall accelerate and all such unvested equity and option grants shall vest at the time of the Change in Control. The foregoing provisions shall prevail over any contrary provisions of the Plan (defined below) and of any award agreement issued by the Plan.
c. For purposes of this Agreement, “Cause,” shall mean: (i) your commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States, any state thereof, or any applicable foreign jurisdiction; (ii) your attempted commission of, or participation in, a fraud or act of dishonesty against the Company or any Affiliate; (iii) your material breach of this Agreement, provided such breach is not cured within thirty (30) days of your receipt of written notice specifically describing the alleged breach; or (iv) your unauthorized use or disclosure of the Company's or any Affiliate's confidential information or trade secrets; or (v) your gross misconduct.
d. For purposes of this Agreement, “Good Reason” shall mean: (i) the Company’s material breach of this Agreement including any material failure to pay any salary or bonus, provide any employee benefit or make any grant required under this Agreement; (ii) imposition of any requirement that you routinely report to an office more than 25 (twenty-five) miles from your current home office; (iii) any reduction in your base salary or target bonus; or (iv) material diminution of your duties or title, including imposition of any requirement that you report to any Company official other than the Company’s Chief Executive Officer. In order to resign for Good Reason, you must give written notice to the Company specifically describing any Good Reason condition within ninety (90) days of when it first arises, allow the Employer thirty (30) days to cure such condition, and resign your employment effecting within fourteen (14) days after the end of the 30-day cure period. If you fail to terminate your employment within 14 days after the end of the cure period, you will be deemed to have waived the Good Reason condition(s) of which you gave the Company notice.
e. In order to receive the Severance Benefits, you must sign a general release agreement waiving all claims you may have against the Company arising from or concerning your employment or the termination thereof (the “Release”) except any rights to any vested benefits under any benefit plan including the Plan or any successor Plan, any claims that cannot be waived by law, or any claims or rights to indemnification, or insurance, from the Company, under the Company’s articles of incorporation, bylaws, or any agreement with the Company.
8. Restrictive Covenants; Arbitration. As a condition to your employment, you will be required to submit to a customary background check and references, and execute (and not revoke) a restrictive covenants agreement provided by the Company, which will include customary terms, including with respect to confidentiality and assignment of intellectual property rights. All disputes or claims that you may have under this Offer or otherwise related to your employment with the Company will be subject to final, binding and confidential arbitration held in New York, New York and conducted by JAMS Mediation, Arbitration and ADR Service under its rules and procedures, and the arbitrator will have the right to compel adequate discovery and award relief as permitted by law. You hereby waive your right to resolve any such disputes through trial by jury, judge or administrative proceeding. Each party will bear its own costs, including legal fees, related to the arbitration and one-half of the costs of the arbitrator. Notwithstanding the foregoing, you and the Company will be permitted to seek injunctive relief in court in order to prevent irreparable harm pending the conclusion of any such arbitration, you will not be required to arbitrate any claims which by law cannot be the subject of a compulsory arbitration agreement, and nothing precludes you from filing charges with the federal EEOC or similar state or local agency.
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9. Taxes. Your compensation and benefits received from the Company or any of its affiliates will be subject to applicable tax withholding and deductions. If you were to receive any payment or benefit from the Company or any of its affiliates that would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code (the “Code”), then, to the extent any excise tax under Section 4999 of the Code applies to such payment or benefit, the payment or benefit will be reduced to an amount that would result in no such excise tax, only if the after-tax amount is greater to you than if no reduction had occurred (after taking into account all applicable taxes). Payments provided to you under this Offer are intended to be either exempt from or comply with Section 409A of the Code (“Section 409A”) and will be interpreted accordingly, and any payments or benefits provided to you in installments will be deemed to be separate payments for purposes of Section 409A. To the extent necessary to avoid the imposition of an excise tax under Section 409A, any payments or other benefits provided to you may be paid no earlier than six months and one day after your separation from service (or earlier upon your death), and all payments that constitute deferred compensation under Section 409A and are payable to you upon your termination of employment shall only be paid if your termination constitutes a “separation from service” under Section 409A.
10. Clawback. Any amounts payable hereunder are subject to any policy (whether currently in existence or later adopted) established by the Company providing for clawback or recovery of amounts that were paid to you. The Company will make any determination for clawback or recovery in its reasonable discretion and in accordance with any applicable law or regulation.
11. Assignment; Entire Agreement: Except as otherwise agreed by you, this Offer is assignable solely by the Company to its successors as a result of a merger, or sale of substantially all the Company’s assets; provided, however, that while providing services to the Company, your employer of record may be the Company or any of its affiliates. This Offer, together with the Attachment and the restrictive covenants agreement referenced herein, constitutes the entire agreement and understanding between you and the Company and supersedes any prior understandings, agreements or representations.
12. Amendment; Termination; Severability; Counterparts: This Offer may only be amended by mutual written agreement between you and the Company. Any provision of this Offer, or the restrictive covenants agreement, that is held to be invalid, illegal or unenforceable shall not affect the validity, legality and enforceability of any remaining provisions. This Offer may be executed in counterparts, including by electronic signature, each which will constitute the same instrument.
13. Governing Law: This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
We are excited at the prospect of you joining our team. If you have any questions about the above details, please call me immediately. If you wish to accept this position, please sign below and return this letter.
Yours sincerely,
/s/ Michael Pruitt
By: Michael Pruitt
Title: Interim Chief Executive Officer
Forward Industries, Inc.
RYAN NAVI
/s/ Ryan Navi
Ryan Navi
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ATTACHMENT
In consideration for your services to the Company, you will be eligible to receive certain grants of equity awards under the Company’s 2021 Equity Incentive Plan (as may be amended or restated from time to time, the “Plan”) in accordance with the terms and conditions set forth below.
| Approvals: | All grants of equity awards will be subject to: |
| (i) | approval by the Board or a duly authorized committee of the Board; | |
| (ii) | the availability of sufficient shares of the Company’s common stock (“Shares”) under the Plan or approval by the stockholders of the Company of an amendment to the Plan increasing the number of Shares available for issuance under the Plan; and | |
| (iii) | your execution of any award agreements or other documentation reasonably required by the Company. |
| Stock Options: | Subject to the conditions set forth above, you will be eligible to receive two grants of options to purchase Shares (“Options”) as set forth below: |
| (i) | A number of Options equal to 0.150% of the fully diluted Shares outstanding as of the grant date with an exercise price per Share equal to 200% of the Fair Market Value of a Share. | |
| (ii) | A number of Options equal to 0.150% of the fully diluted Shares outstanding as of the grant date with an exercise price per Share equal to 300% of the Fair Market Value of a Share. |
| The Options will vest 25% on the first anniversary of the grant date and in 12 equal quarterly installments thereafter and will have a 10-year term. |
| RSUs: | Subject to the conditions set forth above, you will be eligible to receive a number of restricted stock units with respect to Shares (“RSUs”) equal to 0.325% of the fully diluted Shares outstanding as of the grant date. |
| The RSUs will vest 25% on the first anniversary of the grant date and in 12 equal quarterly installments thereafter. |
| PSUs: | Subject to the conditions set forth above, you will be eligible to receive two grants of performance-vesting RSUs (“PSUs”) as set forth below: |
| (i) | A number of PSUs equal to 0.125% of the fully diluted Shares outstanding as of the grant date that vest, if at all, subject to the Company holding 0.075 SOL per Share outstanding (which is equal to (A) 1.25 multiplied by (B) the quotient obtained by dividing (x) the amount of SOL purchased by the Company with proceeds from its private investment in public equity financing (the “PIPE”) (6,822,000 SOL) by (y) the number of fully diluted Shares outstanding as of the closing of the PIPE (113,196,340 Shares). |
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| (ii) | A number of PSUs equal to 0.125% of the fully diluted Shares outstanding as of the grant date that vest, if at all, subject to the Company holding 0.090 SOL per Share outstanding equal to (A) 1.5 multiplied by (B) the quotient obtained by dividing (x) the amount of SOL purchased by the Company with proceeds from the PIPE (6,822,000 SOL) by (y) the number of fully diluted Shares outstanding as of the closing of the PIPE (113,196,340 Shares). | |
| (iii) | A number of PSUs equal to 0.125% of the fully diluted Shares outstanding as of the grant date that vest, if at all, subject to the Company holding 0.105 SOL per Share outstanding (which is equal to (A) 1.75 multiplied by (B) the quotient obtained by dividing (x) the amount of SOL purchased by the Company with proceeds from its private investment in public equity financing (the “PIPE”) (6,822,000 SOL) by (y) the number of fully diluted Shares outstanding as of the closing of the PIPE (113,196,340 Shares). | |
| (iv) | A number of PSUs equal to 0.125% of the fully diluted Shares outstanding as of the grant date that vest, if at all, subject to the Company holding 0.121 SOL per Share outstanding (which is equal to (A) 2.00 multiplied by (B) the quotient obtained by dividing (x) the amount of SOL purchased by the Company with proceeds from its private investment in public equity financing (the “PIPE”) (6,822,000 SOL) by (y) the number of fully diluted Shares outstanding as of the closing of the PIPE (113,196,340 Shares). |
| Changes in Capitalization: | In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase, other reorganization or corporate transaction or event, special or extraordinary dividend or other extraordinary distribution, stock split, reverse stock split, subdivision, consolidation, combination or exchange of shares or another change in corporate structure affecting the common stock of the Company, the number and kind of securities subject to the Options, RSUs and PSUs, strike prices applicable to the Options and the performance goals applicable to the PSUs will be equitably substituted or proportionately adjusted. |
| Other Terms and Conditions: | All awards vest subject to your continued employment with the Company on the applicable vesting date. All other terms and conditions applicable to the Options, RSUs and PSUs described herein will be subject to the terms of the Plan and the applicable award agreement. |
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Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Michael Pruitt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Forward Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 14, 2026
| /s/ Michael Pruitt |
|
Michael Pruitt Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Mark Brazier, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Forward Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 14, 2026
| /s/ Mark Brazier |
|
Mark Brazier Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Forward Industries, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Pruitt, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Michael Pruitt |
|
Michael Pruitt Chief Executive Officer (Principal Executive Officer) |
Dated: May 14, 2026
In connection with the quarterly report of Forward Industries, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Mark Brazier, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Mark Brazier |
|
Mark Brazier Chief Financial Officer (Principal Financial Officer) |
Dated: May 14, 2026