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

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 1
Chunk 25
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 15 

Additionally, digital asset lending
platforms are vulnerable to operational and cybersecurity risks. Technical failures, software bugs or system outages could disrupt lending
activities, delay transactions or result in inaccurate record-keeping. Cybersecurity threats, including hacking, phishing and other malicious
attacks, pose further risks, potentially leading to the loss, theft or misappropriation of our loaned SOL. A successful cyberattack or
security breach could materially and adversely impact our financial position, reputation and ability to conduct future lending activities.

Decentralized finance arrangements may expose
us to risks of smart contract risk, operational failures and cybersecurity threats.

From time to time, we may generate
income through the use of digital assets including SOL or stablecoins in decentralized protocols including decentralized finance (“DeFi”)
applications. DeFi applications include over-collateralized borrow-lend vaults, token-exchange pools, and other financial or commercial
arrangements. Although these protocols are largely designed to limit counterparty risk in transactions, they introduce novel risks relating
to software code bugs, liquidation risks, and governance risks. These protocols are designed to operate in decentralized environments
but can be subject to failures or exploits. In addition: (a) network congestion or downtime can increase the likelihood of asset loss
or liquidation; (b) the volatility of digital assets deployed into DeFi applications may increase the likelihood of liquidation due to
market downturns, liquidity crises, governance attacks or other exploits, leading to substantial financial losses; (c) the uncertainty
in the accounting treatment of certain DeFi applications; (d) DeFi applications generally operate on a user-to-protocol basis where a
user of a DeFi application does not know the identity of other parties utilizing the DeFi application; and (e) the use of monitoring and
forensics software to mitigate risks of engaging in DeFi applications may not prevent the Company from engaging in DeFi pools that are
also used by bad actors or sanctioned persons.

The reliance on open-source code by digital
asset networks exposes us to risks related to competitive networks and products built on such code, the failure of individuals to maintain
that code, and discovery of security vulnerabilities that could threaten the ability of such networks to operate.

Digital asset networks are open-source
projects and, although there may be an influential group of leaders in the network community, generally there is no official developer
or group of developers that formally controls the digital asset network. Without guaranteed financial incentives, there may be insufficient