Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 4

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 1
Chunk 4
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 or collateral posting, which could reduce
available liquidity. Option premiums paid or received may also create volatility in our near-term cash flows.

We also intend to participate
in liquid staking protocols by converting a portion of our SOL holdings into Liquid Staking Tokens (“LSTs”). This will
allow us to earn staking rewards while maintaining the liquidity of our underlying SOL and enabling us to use the LSTs in various DeFi
applications. We may manage a mix of traditionally staked SOL and LSTs to optimize liquidity.

Use of Custodians and Storage
of SOL

We utilize multiple U.S. based
and regulated third-party qualified custodians to hold our SOL, except for a nominal amount held in a hot wallet used for petty payments.
We believe these qualified custodians utilize risk management and operational best practices related to key management, hardware and software
components, access controls, cyber security and insurance, among other practices.

Our primary custodians generally
maintain the majority of their custodied SOL holdings in cold storage (>95%), with hot wallets used only for limited operational purposes.
Custodians employ SOC 2–audited security controls, geographic redundancy, multi-person approval processes, and conduct key-generation
ceremonies in offline, secure facilities. Private keys are never exposed to networked devices. Custodians maintain insurance coverage,
which is in addition to policies we maintain ourselves. Our custody agreements typically run for one to three years, may be terminated
on 30 days’ notice, and include fees for storage and transactions. Our qualified custodians do not rehypothecate or otherwise use
our SOL.

 3 

Use of DeFi Protocols

We may from time to time interact
with DeFi protocols, either directly or indirectly through staking, validator operations, custody arrangements, or liquidity management
activities. DeFi protocols generally rely on open-source smart contracts deployed on public blockchains, including SOL. While these smart
contracts are intended to operate automatically according to their code, they may contain coding errors, vulnerabilities, or design flaws
that can be exploited. We actively evaluate DeFi opportunities within the Solana ecosystem to enhance treasury productivity, while maintaining
robust risk management practices.

SOL - The Token of the Solana
Blockchain

SOL is the native token of the
Solana blockchain. SOL was created with an initial supply of 500 million SOL, though much of the initial supply was locked or earmarked
for various use cases including