Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 21

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 1
Chunk 21
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 to comply with state-specific securities regulations.
States like California have stricter definitions of “investment contracts” than the SEC, increasing the risk of additional
regulatory scrutiny.

The classification of digital assets that we
hold as a commodity could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain
operations.

Under current interpretations,
SOL are classified as a commodity under the Commodity Exchange Act and are subject to regulation by the CFTC. If our activities require
CFTC registration, we may be required to comply with extensive regulatory obligations, which could result in significant costs and operational
disruptions. Additionally, current and future legislative or regulatory developments, including new CFTC interpretations, could further
impact how SOL and SOL derivatives are classified and traded.

If SOL are further regulated
as a commodity, we may be required to register as a commodity pool operator and register the Company as a commodity pool with the CFTC
through the National Futures Association. Compliance with these additional regulatory requirements could result in substantial, non-recurring
expenses, adversely affecting an investment in our securities. If we determine not to comply with such regulations, we may be forced to
cease certain operations, which could negatively impact our investors.

 13 

We are not subject to legal and regulatory obligations
that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.

Mutual funds, exchange-traded
funds (ETFs) and their management are subject to extensive regulation as “investment companies” and “investment advisers”
under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and
do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of our changes
to our digital asset strategy, our use of leverage, our ability to engage in transactions with affiliated parties and our operating and
investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment
companies and investment advisers.

Due to the unregulated nature and lack of transparency
surrounding the operations of many digital asset trading venues, digital asset trading venues experience greater risk of fraud, market
manipulation and other deceptive marketing practices, as well as security failures or regulatory or operational problems than trading
venues for more established asset classes, which may result in a loss of confidence in digital asset trading venues and adversely affect
the value