Forward Industries, Inc.

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.

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.