DEF 14A: Forward Industries Proposes Texas Reincorporation, Boosts Equity Plan

Forward Industries, Inc. seeks shareholder approval for a strategic reincorporation to Texas, an expanded equity incentive plan, and director elections at its upcoming 2026 Annual Meeting.

Summary

• The 2026 Annual Meeting of Shareholders will be held virtually on March 3, 2026, at 10:00 a.m. Central Standard Time.
• Shareholders will vote on electing five directors, ratifying CBIZ CPAs P.C. as the independent registered public accounting firm for fiscal year 2026.
• A proposal to amend the 2021 Equity Incentive Plan to increase available shares for issuance to 8,724,667 shares of common stock (an increase of 8,295,567 shares) will be voted upon.
• Advisory votes on executive compensation and the frequency of future advisory votes on executive compensation (Board recommends every three years) are on the agenda.
• A significant proposal involves changing the company's state of incorporation from New York to Texas by merging with a wholly-owned Texas subsidiary.
• The record date for shareholders entitled to vote is January 22, 2026, with 83,642,042 shares of common stock outstanding.
• The reincorporation is a strategic move to align with the company's new digital asset treasury strategy, leveraging Texas's pro-business and pro-crypto legal environment.
• The company reported a net loss of $166,974,340 for fiscal year 2025, a substantial increase from the $1,950,587 loss in fiscal year 2024.
• A private placement offering in September 2025 raised approximately $1.65 billion in aggregate proceeds, funding the new digital asset strategy.

Sentiment

Score: 7

Explanation: The filing outlines a significant strategic pivot towards digital assets and a reincorporation to a pro-crypto state, backed by a substantial capital raise. While historical financial performance shows losses, the forward-looking initiatives and new management team suggest a strong commitment to a new growth trajectory. The risks associated with the new industry and legal changes are acknowledged but presented within a framework of strategic advantage.

Positives

• The company successfully completed a private placement offering in September 2025, raising approximately $1.65 billion in aggregate proceeds, significantly bolstering its capital base.
• A strategic reincorporation to Texas is proposed, aiming to leverage the state's pro-business and pro-crypto regulatory environment to support the company's new digital asset treasury strategy.
• The 2021 Equity Incentive Plan is proposed to be expanded to 8,724,667 shares, which is intended to attract and retain key talent essential for executing the new digital asset strategy.
• New executive officers, including a General Counsel (Georgia Quinn) and Chief Investment Officer (Ryan Navi), have been appointed, bringing expertise relevant to the digital asset space.
• The Board has determined that its current leadership structure, with an independent Chairman (Kyle Samani), provides effective oversight.
• The company fully repaid a $1.6 million promissory note to Forward China and settled approximately $4.1 million in outstanding payables to Forward China in fiscal 2025.

Negatives

• The company reported a substantial net loss of $166,974,340 for fiscal year 2025, a significant increase from the $1,950,587 loss in fiscal year 2024.
• The independent auditor's report for fiscal year 2024 contained an explanatory paragraph regarding the company's ability to continue as a going concern.
• The reincorporation to Texas introduces risks due to the lack of established case law interpreting recent TBOC amendments and ongoing litigation challenging some of these amendments.
• Shareholders may experience a reduction in books and records inspection rights under Texas law, which requires a 5% ownership threshold or a six-month holding period, unlike New York law.
• The company incurred significant fees related to strategic advisory and asset management services with Galaxy, totaling approximately $4.37 million through December 31, 2025.
• Certain Form 4 filings for executive officers and directors (Kathleen Weisberg, Michael Pruitt, Sharon Hrynkow, Sangita Shah) were filed one day past their due date in September 2025.

Risks

• Ability to adapt to a new industry, including regulatory compliance and market volatility associated with digital assets.
• Executing the digital asset treasury strategy and business plan.
• Cybersecurity risks associated with digital asset holdings.
• Liquidity and operational risks during the business transition.
• Lack of established case law interpreting, clarifying, validating, or supporting the recent TBOC Amendments in Texas.
• Ongoing litigation challenging certain TBOC Amendments, which could apply them inconsistently or qualify them in unforeseen ways, potentially having an adverse effect on the business.
• Transaction costs and potential litigation risk associated with the reincorporation.
• Shareholders may lose certain books and records inspection rights under Texas law (requiring 5% ownership or 6 months holding period).
• Anti-takeover implications of reincorporation to Texas, which may deter hostile takeover attempts.

Future Outlook

The company's future outlook is centered on its new mission to expand and strengthen the Solana ecosystem by acquiring and staking Solana, engaging with developers, and investing in Solana-based projects to increase shareholder value. The proposed reincorporation to Texas is a key strategic move to support this mission, leveraging the state's pro-business and pro-crypto legal framework. The expanded equity incentive plan is designed to attract and retain the necessary talent to execute this long-term digital asset treasury strategy, aiming for future stability and profitability despite recent net losses.

Management Comments

• "We are pleased to invite you to attend the 2026 Annual Meeting of the Shareholders..."
• "Your vote is important. Please vote your proxy promptly to ensure your shares are properly represented..."
• "The Board believes that having an independent Chairman provides effective oversight and independence of our Board."
• "The Board believes that the appointment of a strong independent Chairperson with knowledge of and experience in the digital asset industry and the use of regular executive sessions of the independent directors, along with the Boards committee system, allow it to maintain effective oversight of management."
• "The Board believes that taking an active role in the oversight of Forwards corporate strategy and the related risks is appropriate, given our Board members combined breadth and depth of experience, and is critical to ensuring that the long-term interests of Forward and its shareholders are being served."
• "Our mission is to expand and strengthen the Solana ecosystem by acquiring and staking Solana and engaging with, providing tools to and investing in the Solana protocol, Solana developers and Solana based projects in order to increase shareholder value."
• "The Board views Texass increasingly code-based approach as better supporting the Companys strategic planning in todays competitive environment."
• "The states pro-business regulatory climate favors private ordering, limits unnecessary compliance obligations, and minimizes administrative costs."
• "Texas has firmly established itself as a national leader in digital asset adoption—viewing crypto not as a niche experiment, but as a cornerstone of its economic future."
• "The compensation structure encourages management to make decisions that favor the Companys future stability and profitability, rather than short term results."
• "The purpose of these grants was to retain the Named Executive Officers to assist in the execution of the Companys new digital asset treasury strategy... and to align the interests of the Named Executive Officers with the new shareholders of the Company."
• "The Board considers multiple factors when determining executive compensation, including both financial and non-financial performance metrics, strategic objectives, and market conditions. While the Company has experienced net losses in recent years, the Board believes that compensating executives competitively is necessary to retain key talent with the skills to provide the leadership the Company needs to succeed and to execute on the Companys long-term strategic plan."

Industry Context

Forward Industries is undergoing a significant strategic pivot towards a digital asset treasury strategy, specifically focusing on the Solana ecosystem. This move positions the company within the rapidly evolving blockchain and cryptocurrency industry, aligning with broader trends of institutional and corporate adoption of digital assets. The proposed reincorporation to Texas is a direct response to the state's increasingly favorable regulatory and business environment for crypto innovation, including its recognition of digital assets and initiatives like the Strategic Bitcoin Reserve. This strategic shift represents a departure from the company's previous OEM and retail divisions, aiming to capitalize on the growth potential within the digital asset space.

Comparison to Industry Standards

• Texas's corporate law, particularly the recent TBOC Amendments, is presented as a more 'code-based, forward-looking governance regime' compared to New York's, offering greater certainty for corporate decision-making, especially for innovative companies.
• The codified business judgment rule in Texas, which requires proof of intentional misconduct, fraud, an ultra vires act, or a knowing violation of law for breach of duty claims, offers potentially stronger protections for directors than New York's more case-law-driven approach.
• Shareholder inspection rights differ significantly: Texas law requires a 5% ownership threshold or a six-month holding period for inspection, which is more restrictive than New York law, potentially impacting shareholder oversight compared to companies incorporated in New York.
• Texas law allows directors to consider long-term interests and continued independence in change of control transactions, similar to New York, but New York law generally mandates directors to act reasonably to obtain the best price once a change of control is pursued.
• The company's strategic pivot to the Solana ecosystem and digital asset treasury strategy places it in a high-growth, high-volatility sector, contrasting sharply with traditional manufacturing and retail businesses, and aligning it with other companies actively engaging in blockchain and cryptocurrency investments.

Management Changes

Corporate Governance

Legal Proceedings

• Amergent Hospitality Group Inc., where Michael Pruitt serves as Chairman and CEO and Keith Johnson serves as a director, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas in July 2024.
• In October 2025, the Court approved the reorganization of Amergent Hospitality Group, Inc. and the liquidation of certain of its subsidiaries.
• There is ongoing litigation challenging certain of the TBOC Amendments in Texas, including a preliminary injunction entered by the U.S. District Court for the Western District of Texas on August 30, 2025, enjoining the Texas Attorney General from enforcing proxy advisory services disclosure requirements against ISS and Glass Lewis.

Related Party Transactions

• The company had a Buying Agency and Supply Agreement and a New Buying Agency and Supply Agreement with Forward Industries Asia-Pacific Corporation (Forward China), owned by former Chairman Terence Wise. Service fees were approximately $331,000 in fiscal 2025 and $891,000 in fiscal 2024.
• As of October 30, 2023, the company owed Forward China $7,365,238 under a Deferred Payment Agreement, which was later settled.
• Approximately $4,925,000 of accounts payable due to Forward China were converted into Series A-1 Convertible Preferred Stock in fiscal 2025.
• A $1.6 million promissory note to Forward China, bearing 8% interest, was repaid in fiscal 2025. Interest payments were approximately $49,000 in fiscal 2025 and $63,000 in fiscal 2024.
• In May 2025, the company sold its wholly-owned subsidiary, Forward Industries (Switzerland) GmbH, and other OEM business assets to Forward China to satisfy approximately $4,100,000 in outstanding payables.
• The company had an agreement with The Justwise Group, Ltd. (Justwise), also owned by Terence Wise, for services related to the Koble brand. Revenue from Koble products was $0 in fiscal 2025 and $380,000 in fiscal 2024.
• An arrangement with Happ LLC, whose principal owner is the daughter of Jenny P. Yu (a Managing Director of Forward China), generated approximately $0 in revenue in fiscal 2025 and $523,000 in fiscal 2024.
• In September 2025, the company entered into a Strategic Advisor and Lead Investor Agreement with Galaxy Digital LP (Galaxy), issuing 1,783,519 Pre-Funded Warrants and 4,458,796 warrants to Galaxy for its services related to the private placement.
• A Services Agreement with Galaxy, for operational, financial, and human resources services related to the digital asset treasury strategy, incurs a monthly fee of approximately $583,000. Fees incurred were approximately $2.14 million through December 31, 2025.
• An Asset Management Agreement with Galaxy Digital Capital Management LP (a Galaxy subsidiary) for discretionary investment management of digital assets incurs management fees of 0.6% per annum. Fees incurred were approximately $2.23 million through December 31, 2025.

Stakeholder Impact

• Shareholders: Will be directly impacted by the proposed reincorporation, which alters corporate governance and shareholder rights, and the expanded equity incentive plan, which could lead to dilution but also aims to attract talent for the new strategic direction. The substantial capital raise and strategic pivot to digital assets present both significant growth opportunities and new risks.
• Employees and Management: The expanded equity incentive plan is designed to attract, motivate, and retain key personnel for the new digital asset strategy. New executive appointments reflect a shift in leadership focus.
• Customers and Suppliers: The company's exit from its OEM and retail divisions (e.g., Koble products, dealings with Happ LLC) indicates a discontinuation of previous customer and supplier relationships in those segments. The new digital asset strategy implies a different ecosystem of partners and stakeholders.
• Creditors: The repayment of the promissory note to Forward China and the settlement of other payables, coupled with the $1.65 billion capital raise, significantly improve the company's liquidity and financial standing, which is positive for creditors.

Next Steps

• Shareholders will vote on the proposed director elections, auditor ratification, equity incentive plan amendment, executive compensation advisory votes, and the reincorporation to Texas at the Annual Meeting on March 3, 2026.
• If approved, the 2021 Plan Amendment will become effective immediately.
• If the reincorporation proposal is approved, the company intends to make necessary filings with the Secretary of State of Texas and New York to effect the merger.
• The Board will review and consider the voting results of the advisory vote on executive compensation when making future decisions regarding executive compensation programs.
• The Board will determine the preferred frequency for future say-on-pay votes based on the option receiving the most votes from shareholders.

Key Dates

Recommendation

The company is undergoing a significant strategic transformation into the digital asset space, backed by a substantial capital raise. While this pivot offers high growth potential, it also introduces new and substantial risks related to market volatility, regulatory compliance, and execution of an unproven strategy in a new domain. The historical financial performance shows significant losses, indicating the challenges of the previous business model. The reincorporation to Texas is a positive step for the new strategy, but the legal implications are still evolving. A 'hold' recommendation is appropriate for investors to observe the execution of the new digital asset strategy and assess its initial results before making a more definitive investment decision. The large capital raise provides a strong foundation, but the path to profitability in the new venture is yet to be demonstrated.

Keywords

Digital Assets, Solana Ecosystem, Reincorporation, Texas Corporate Law, Equity Incentive Plan, Proxy Statement, Corporate Governance, Executive Compensation, SEC Filing, Shareholder Meeting, Financial Performance, Risk Management, Private Placement, Blockchain, Cryptocurrency