Forward Industries, Inc.

Forward Industries, Inc. operates in two distinct industries: hardware and software product design and engineering services for top tier medical and technology customers predominantly located in the U.S., and a digital asset treasury business focused on acquiring and holding Solana (SOL) and other digital assets, with SOL adopted as its primary treasury reserve asset. The design business provides a complete range of services including electrical, mechanical, and software engineering, industrial design, UX/UI design, optical engineering, program management, IoT system architecture, and IT support, serving a diverse array of consumer and industrial electronics products such as medical products, smart displays, beverage vending, enterprise and mobile software applications, lighting, security and detection systems, cameras, wearables, and vehicle controls. The digital asset treasury strategy, launched in September 2025, involves applying a public-market treasury model to SOL, which management believes is earlier in its lifecycle, structurally reflexive, and underexposed as compared to Bitcoin, with the principal holding in the treasury reserve allocated to digital assets, primarily SOL.

In the design segment, management believes there are very few competitive firms that have the full set of capabilities under one roof, though numerous design and engineering companies compete in specific industries or with specific targeted skills. The digital asset treasury business faces a dynamic and evolving competitive landscape characterized by intensifying competition among publicly listed digital asset treasury companies that diversify holdings beyond Bitcoin to include other digital assets such as Ethereum and SOL, with periods of market volatility potentially creating opportunities for larger, more stable participants to pursue accretive mergers and acquisitions and further consolidate the market. The Company believes its focus on SOL and the Solana ecosystem, combined with its capital markets and onchain strategies, positions it to compete effectively within this rapidly developing market.

The Company generates revenue through two reportable segments: design and digital assets. The design segment generates revenue through time and material contracts recognized over time using a 'right to invoice' method, and fixed price contracts recognized using a 'cost to cost' method or upon satisfaction of specific deliverables. The digital assets segment generates revenue from SOL-based yield by participating in the Solana network's staking protocol, recognizing noncash consideration from staking activities at the point in time when validation services are successfully provided and the reward is determinable and collectible, measured as the fair value of digital assets received at contract inception. The design segment serves customers predominantly located in the U.S., while the digital assets segment's revenue is derived from blockchain network rewards.

The design segment provides hardware and software product design and engineering services, with in-house capabilities including electrical engineering, mechanical engineering, software engineering, industrial design, UX/UI design and development, optical engineering, program management, IoT system architecture, and IT support. In Fiscal 2025, the design segment generated revenues of $13,606,000 ¹ and a gross profit of $779,000 ², with a gross margin of 5.7% ³, compared to revenues of $19,991,000 ⁴ and gross profit of $5,184,000 ⁵ in Fiscal 2024. The digital assets segment generated staking revenue of $4,582,000 ⁶ in Fiscal 2025, with gross profit of $4,412,000 ⁷ and a gross margin of 96.3% ⁸. The design segment incurred goodwill impairment charges of $1,167,000 ⁹ related to the IPS reporting unit and $391,000 ¹⁰ related to the Kablooe reporting unit, and intangible asset impairment charges of $271,000 ¹¹ related to the IPS reporting unit and $197,000 ¹² related to the Kablooe reporting unit during Fiscal 2025.

In September 2025, the Company announced the launch of its digital asset treasury strategy and made initial liquid SOL purchases of 6,822,000 ¹³ SOL at an average price of $232 ¹⁴ per SOL, or approximately $1.58 billion ¹⁵ in the aggregate. The Company entered into an Asset Management Agreement with Galaxy Digital Capital Management LP and a Services Agreement with Galaxy Digital LP on September 10, 2025. In September 2025, the Company sold and issued in a private placement an aggregate of 77,144,562 ¹⁶ shares of common stock at an offering price of $18.50 ¹⁷ per share and pre-funded warrants to purchase 12,031,364 ¹⁸ shares of common stock, receiving aggregate proceeds of approximately $1.65 billion ¹⁹ before deducting placement agent fees and other offering expenses, with net proceeds of approximately $1.58 billion ²⁰. The Company also entered into a Strategic Advisor Agreement with Galaxy Digital LP, issuing 1,783,519 ²¹ pre-funded warrants and 4,458,796 ²² advisor warrants, and a Lead Investor Agreement with J Digital 6 Cayman Ltd. and Multicoin Capital Master Fund, LP, issuing 1,783,519 ²³ lead investor shares and 4,458,796 ²⁴ lead investor warrants each. In May 2025, the Company completed the sale of its OEM distribution segment. The Company entered into a Controlled Equity Offering Sales Agreement for an at-the-market offering of up to $4 billion ²⁵ in common stock. The Board of Directors authorized a share repurchase program permitting the Company to repurchase up to $1 billion ²⁶ of its common stock on November 3, 2025.

Total consolidated net revenues from continuing operations were $18,187,525 ²⁷ in Fiscal 2025, compared to $19,990,833 ²⁸ in Fiscal 2024, a decline of 9.0% ²⁹. Gross profit was $5,191,244 ³⁰ in Fiscal 2025 versus $5,183,716 ³¹ in Fiscal 2024, with gross margin increasing from 25.9% ³² to 28.5% ³³. Operating loss was $8,392,420 ³⁴ in Fiscal 2025 compared to $2,151,118 ³⁵ in Fiscal 2024. Loss from continuing operations was $169,088,979 ³⁶ in Fiscal 2025 versus $2,166,179 ³⁷ in Fiscal 2024, driven primarily by a $160,035,105 ³⁸ loss on change in fair value of digital assets. Net loss attributable to common shareholders was $167,003,784 ³⁹ in Fiscal 2025 compared to $1,950,587 ⁴⁰ in Fiscal 2024. Basic and diluted loss per share from continuing operations was $24.90 ⁴¹ in Fiscal 2025 versus $1.97 ⁴² in Fiscal 2024.

The primary growth vector is the new digital asset treasury strategy focused on acquiring SOL and other digital assets, with the Company planning to pursue strategic initiatives including staking the majority of SOL holdings to earn a staking yield, purchasing SOL at a discount to spot price through over-the-counter transactions and strategic partnerships, actively participating in DeFi protocols and other onchain strategies, and pursuing accretive partnerships and acquisitions within the Solana ecosystem. The Company intends to delegate SOL to its own validators operated by third-party service providers through a white-label arrangement and to other third-party SOL validators, and may also participate in liquid staking protocols by converting a portion of SOL holdings into Liquid Staking Tokens to earn staking rewards while maintaining liquidity. The Company also plans to utilize capital markets instruments such as structured products and non-dilutive debt to enhance liquidity and expand SOL holdings, and may sell SOL holdings to repurchase shares of common stock when the Board believes such repurchases will result in accretive value creation.

The design segment's growth vector involves continuing to serve top tier medical and technology customers with hardware and software product design and engineering services, though the filing notes the loss of a major design customer in December 2024 that notified the Company of its plan to discontinue their insulin patch program, which is expected to continue to cause a material decrease in revenues relative to Fiscal 2024. The Company has implemented cost reduction efforts to mitigate this reduction in design revenue, including staff reductions in January and June 2025.

The design segment's gross margin declined from 25.9% ⁴³ in Fiscal 2024 to 5.7% ⁴⁴ in Fiscal 2025, driven by lower utilization rates, partially mitigated by staff reductions. The digital assets segment generated a gross margin of 96.3% ⁴⁵ in Fiscal 2025. General and administrative expenses increased significantly due to higher share-based compensation, professional fees related to the sale of the OEM segment and recent financing transactions, costs associated with additional shareholder meetings, higher investor relations spending, and digital assets asset management fees to Galaxy Digital of $539,000 ⁴⁶. Management intends to adjust costs as needed based on the overall needs of the business.

The Company has approximately 60 ⁴⁷ employees as of November 30, 2025, substantially all full-time, with none covered by a collective bargaining agreement, and hires consultants on an as-needed basis. The Company has incorporated a group of over 20 ⁴⁸ special advisors and consultants who provide strategic guidance particularly with respect to the development and oversight of the new Treasury Policy. The Company intends to appoint a Chief Information Security Officer in Fiscal 2026 in connection with the new digital asset treasury strategy. The Company leases 14,000 ⁴⁹ square feet in Hauppauge, New York for executive offices and IPS under a lease expiring in April 2027 with rent payments of approximately $33,000 ⁵⁰ per month during Fiscal 2025, and 11,000 ⁵¹ square feet in Coon Rapids, Minnesota for Kablooe under a lease expiring in June 2026 with rent payments of approximately $11,000 ⁵² per month during Fiscal 2025.

The Company raised gross proceeds of over $1.65 billion ⁵³ through multiple equity financing transactions from May 2025 to September 2025, including $900,103,815 ⁵⁴ net from the Securities Purchase Agreement, $33,000,000 ⁵⁵ from the Waiver and Leak-out Agreement, $3,962,018 ⁵⁶ net from the ATM, $2,360,869 ⁵⁷ net from the Equity Line of Credit, $2,237,565 ⁵⁸ from the Registered Direct Offering, and $970,946 ⁵⁹ net from the issuance of Series B preferred stock and warrants. The Board of Directors authorized a share repurchase program of up to $1 billion ⁶⁰ on November 3, 2025, though no shares had been repurchased through the filing date. The Company does not anticipate paying dividends on common stock at any time in the foreseeable future.

The Company faces significant headwinds including the high volatility of SOL prices, which could materially adversely affect financial results if the price decreases substantially. The design segment faces headwinds from the loss of its largest design customer in December 2024, which accounted for over 30% ⁶¹ of consolidated net revenues in Fiscal 2024, and the design business generated a net loss of approximately $5,159,000 ⁶² in Fiscal 2025. The Company's digital asset treasury strategy is subject to substantial legal, commercial, regulatory and technical uncertainty, including the risk that SOL could be classified as a security, which could require the Company to register as an investment company under the Investment Company Act of 1940 and impose significant financial and regulatory burdens. The Company also faces risks related to the concentration of its SOL holdings, with initial purchases valued at approximately $232 ⁶³ per SOL, or $1.58 billion ⁶⁴ in the aggregate, and the fair value declining to approximately $209 ⁶⁵ per SOL, or $1.43 billion ⁶⁶ in the aggregate at September 30, 2025, and further to approximately $133 ⁶⁷ per SOL, or $920.5 million ⁶⁸ in the aggregate at November 30, 2025.

The Company's digital asset treasury strategy is highly concentrated in SOL, with initial purchases of 6,822,000 ⁶⁹ SOL at an average price of $232 ⁷⁰ per SOL, and the fair value declining to approximately $133 ⁷¹ per SOL, or $920.5 million ⁷² in the aggregate at November 30, 2025, exposing the Company to significant price volatility risk. If SOL is determined to be a security under federal securities laws, the Company could be deemed an unregistered investment company under the Investment Company Act of 1940, which could necessitate liquidation or impose significant additional regulatory burdens and compliance costs. The design business generated a net loss of approximately $5,159,000 ⁷³ in Fiscal 2025 and lost its largest design customer in December 2024, which accounted for over 30% ⁷⁴ of consolidated net revenues in Fiscal 2024. The Company faces risks related to the custody of digital assets, including potential loss from cyberattacks, theft, or security breaches, with no insurance from the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation. The Company maintains approximately $40.4 million ⁷⁵ in uninsured cash deposits at commercial banks as of November 30, 2025.

Management's message emphasizes a transformative strategic shift with the launch of the digital asset treasury strategy focused on SOL, alongside continuing the hardware and software product design and engineering services business. Key themes include the belief that SOL is currently the fastest and most used public blockchain in the world, processing more transactions and generating more onchain fee revenue than all other blockchains combined, and that the Solana ecosystem is advantaged by best-in-class technology and strong network effects. The strategic priorities emphasized for the period ahead are: executing the new Treasury Policy by acquiring SOL directly through market purchases, staking holdings via validators, and generating incremental revenue through strategic partnerships and deployments within the Solana ecosystem; managing the design business through cost reduction efforts following the loss of a major customer; and utilizing capital markets issuances and onchain strategies to enhance shareholder value, including potential share repurchases when the Board believes such repurchases will result in accretive value creation.