Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 29

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 1
Chunk 29
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 operators that
would need to collude to compromise or take control of a blockchain network. In contrast, Ethereum has a higher number of validators.
Despite the higher Nakamoto coefficient, a malicious actor might more easily be able to gain control of a network with fewer validators.
Such control of the network could allow a malicious actor to censor transactions, reverse transactions (double-spending), or manipulate
block validations.

Solana is subject to technological obsolescence,
including competition from emerging blockchain and artificial intelligence protocols.

The digital asset ecosystem is
characterized by rapid technological innovation, short development cycles, and intense competition among blockchains and related infrastructure
providers. Solana faces intense competition among existing protocols, such as Aptos, Hyperliquid, Sei and Sui, the Ethereum Layer 2 blockchains
such as Base, and new entrants that are currently being developed. Competitors may offer or develop superior scalability, security, interoperability,
decentralization, programmability and adoption, and may attract developers away from the Solana ecosystem. Advancements in AI and blockchain
technology are likely to accelerate the development of such protocols, including the development of additional networks that natively
integrate AI into consensus mechanisms and other core features. If Solana is unable to evolve to address such increased competition or
if market participants believe that Solana’s core technology stack is outdated or less attractive compared with other blockchain
networks, Solana may be considered technologically obsolete by the next generation of protocols. The decline in the Solana network would
materially impact the market value of SOL and adversely affect the value of our SOL treasury holdings and our stock price.

The Company may be subject to additional tax
liability if regulation or policy changes adversely affect the tax treatment of rewards from staking SOL.

The U.S. federal income tax treatment
of rewards from staking digital assets such as SOL or utilizing liquid staking tokens remains uncertain and is currently the subject of
debate and regulatory attention. Under current guidance by the Internal Revenue Service (“IRS”), staking rewards and transaction
fees may be treated as ordinary income upon receipt, although additional guidance is expected pursuant to the President’s Working
Group July 2025 report “Strengthening American Leadership in Digital Financial Technology.” If regulation or policy changes,
or the interpretation or enforcement thereof, results in adverse tax treatment of rewards from staking SOL, we could be subject to increased
audits by the IRS and additional tax liabilities.

The Solana blockchain experiences a high number
of “