Forward Industries, Inc.

Good afternoon and welcome to the Forward Industries Fiscal Third Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will open the call for a question-and-answer session. As a reminder, this call is being recorded, and a replay will be available on the company's Investor Relations website. I would now like to turn the call over to Georgia Quinn, General Counsel of Forward Industries. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to Forward Industries' earnings call for our fiscal third quarter, which ended June 30, 2026. Joining me on today's call are Kyle Samani, our Chairman, Ryan Navi, our Chief Investment Officer, and Mark Brazier, our Chief Financial Officer. Earlier this afternoon, we issued a press release announcing our financial and operating results for the quarter. That release, along with the presentation accompanying today's remarks, is available on the Investor Relations section of our website at www.forwardindustries.com. Before we begin, I need to remind everyone that certain statements made on today's call are forward-looking statements within the meaning of the federal securities laws. These statements include, among other things, statements regarding our Solana Treasury strategy, our expectations for sole per share growth, our expected returns on certain investments, our capital allocation plans, pending or potential acquisitions, and regulatory developments. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied on this call. We describe these risks in our filings with the Securities and Exchange Commission, including our most recent form, 10-K, and subsequent Form 10-Q firings. We undertake no obligation to update any forward-looking statement except as required by law. In addition, during today's call, we will refer to certain operating metrics, including sole holdings, sole per share, and MNAV. These are operational measures we use to describe our Treasury strategy. They are not prepared in accordance with U.S. GAAP. and they should be considered alongside, not as substitutes, for our GAAP financial results. Definitions and methodology for these metrics are included on our website. With that, I'll turn the call over to our chairman, Kyle Samani. Kyle?

Thank you, Georgia, and thank you to everyone joining us this afternoon. This was our third full quarter executing the Solana Treasury Strategy we launched last September, and I want to open with the numbers that matter most to how we run this company. As of June 30th, we held approximately 7.6 million SOL tokens and SOL equivalents. SOL per share on a fully diluted basis was 0.0730, which is up from 0.0669 at March 31st, which translates to an annualized growth rate of approximately 36%. That momentum has continued into the current quarter. As of August 3rd, we hold approximately 7.8 million SOL tokens, having added approximately another 254,000 SOL tokens

just over a month ago at an average sole cost of approximately $75 per token, bringing our sole per share to 0.0754.

Every decision we make is in service of growing sole per share on a risk-adjusted basis, and this quarter our team continued to deliver on that promise for our shareholders. That growth has come alongside real scale. As the world's largest Solana treasury strategy, Ford reached an important milestone this quarter. Effective June 29th, Forward was added to the Russell 2000 and Russell 3000 indices as part of their semi-annual reconstitutions. Index inclusion reinforces the growing institutional recognition of our strategy, scale, and execution. We believe it will broaden our shareholder base, improve trading liquidity, and increase our visibility amongst both institutional investors who track these benchmarks directly, as well as retail investors who allocate to the Russell indices as passive investments. forward inclusion is a testament to what our team has built and to the scale this company has reached in a short period of time. It's been a busy quarter for the Solana ecosystem as well, which has continued to demonstrate not only resiliency, but accelerated growth as the ecosystem of choice for institutions, corporations, and individual users. In calendar Q2, Solana had one of the most active stretches in its history. The network processed 3.8 billion transactions in June alone, Monthly token holder addresses reached an all-time high of $167 million in April and tokenized real-world assets on the network crossed $2.5 billion. Earlier this year, the Solana Foundation reported that SOL denominated value locked on the network crossed $80 million SOL for the first time. On economic activity, applications on Solana generated approximately $257 million in application revenue in the June quarter alone, according to DeFi Llama. That made it the ninth consecutive quarter that Solana applications out-earned those on every other blockchain, representing roughly 40% of application revenue across all of Web3 and crypto. In May alone, Solana applications earned more than those on Ethereum and Hyperliquid combined. Real users paying real fees to real businesses is the signal we care about, and no other network comes close. Solana's tremendous growth and notable achievements this quarter continue to reinforce our conviction and validate our company's decision to build a Solana treasury strategy and to be an active participant in driving the ecosystem forward. Solana's network infrastructure also keeps getting faster and more resilient. FiredAnswer, which is the independent validator entity client that Jump Crypto launched on May and then last December, continues to gain adoption across the validator set, and the upcoming Alpenglow consensus upgrade unlocks meaningful, faster finality. We recognize that digital asset markets have remained soft, but as a company with a permanent capital base and a long-term view on the Solana ecosystem, we view quarters like this as an incredible opportunity to continue doubling down on our conviction in Solana as the fundamentals continue to improve and accelerate. Against that backdrop, Forward's position inside the ecosystem keeps compounding. Forward accumulated approximately 508,000 SOL tokens during the quarter, increasing our total SOL held from $7 million to $7.6 million, while growing sole per share from 0.0669 to 0.0730. We continue to stake almost all of our sole holdings to Forge Validator, which continues to be a top 10 validator with approximately 1.8% of network stake weight. Part of our strategy is to selectively allocate capital to high conviction opportunities that extend beyond our core sole holdings. to generate durable, uncorrelated returns while deepening our position in the Solana ecosystem. During the quarter, we put that strategy to work for the first time by taking a minority stake in ONRI, a Solana-based reinsurance platform, and becoming a liquidity provider in ONRI's RWA token called ONYC, an initiative which Ryan will cover in more detail here shortly. Looking ahead, Forward is incredibly well-positioned with access to industry-leading cost of capital and A strong balance sheet and minimal debt. As some of you may have seen with our M&A activity this last quarter, Ford already has begun to leverage our advantageous position, and we expect to continue aggressively pursuing the opportunities that we have in this current market to drive long-term shareholder value. Ryan and Mark will now take you through more details on how we executed in the quarter. Ryan?

Thanks, Kyle, and good afternoon, everyone. Starting with the Treasury. As of August 3rd, 2026, Ford held approximately 7.8 million Solana, which equates to roughly 1.3% of total Solana circulating supply. This compares to 7.6 million Sol as of June 30th and 7.0 million as of March 31st. The sequential increase came from roughly 403,000 Sol acquired through open market purchases and 106,000 Sol and Sol equivalents earned through staking rewards during the quarter. Staking is the foundation of our treasury. We stake nearly all of our Solana to generate a consistent compounding source of sole denominator yield on top of our holdings. Cumulus staking rewards since we launched the strategy in September 2025 now total approximately 307,000 soles. As a quarter end, the vast majority of our sole continues to be staked to the forward validator, which gives us the ability to borrow against the position without interrupting staking rewards and continues to generate positive carry under the terms of our agreements with our institutional lending partners. As of June 30, 2026, our fully diluted MNAV was $0.908. This is based on a sole closing price of $73.53. a fully diluted share count of $103,525,881 and a closing price of $4.22 for FWDI stock. Forward increased its sole holdings by over $500,000 in Q3 at an average cost of approximately $79 per sole token, highlighting our team's continued focus on growing our Solana treasury. That focus has not slowed in the current quarter. As of August 3rd, on a preliminary basis, we have added a further 254,000 SOL at an average cost of approximately $75 per token, bringing total holdings to approximately 7.8 million Solana and a SOL per share of 0.0754 on a fully diluted basis. One month into the quarter, we have already added roughly half of what we accumulated in all of Q3 at a lower average cost. To fund sold purchases, we utilize a number of tools at our disposal. With our recent inclusion in the Russell 2000 and Russell 3000 indices, one of these tools is our at-the-market program, under which we issued approximately 94,000 shares for gross proceeds of $435,000 at prices that were accretive to sold per share. We deploy those proceeds into sold purchases. Our discipline here is mechanical. We issue shares only when it is creative and grows sold per share. During the quarter, we also bought back approximately 2.5 million shares when doing so was accretive to our sole per share. During the quarter, our net change and fully diluted share count was a reduction of approximately 1.7 million shares from 105.2 million to 103.5 million. The buyback and the ATM are two sides of the same discipline. When the stock trades below our net asset value and our internal view of intrinsic value supports it, repurchases are the accretive trade. when it trades above issuances. We will take cues from the market as to which lever to pull. Ultimately, our goal is to drive sole per share growth while also continuing to expand the absolute scale of our treasury. Sole per share on a fully diluted basis was 0.0604 at the end of September 2025 and 0.0624 at December 31st, 0.0669 at March 31st, 2026, and 0.0730 at June 30th, 2026. That is a 9% growth for the current quarter or approximately 36% annualized. Consistent with prior quarters, we calculate sold per share using fully diluted share count. Again, as of June 30th, 2026, our fully diluted MNAV was 0.908. Outside of our sole treasury operations, Ford also made its first Solana ecosystem investment. As Kyle briefly mentioned, we acquired a minority stake in ONRI, a tokenized reinsurance platform. In connection with the investment, we committed up to $25 million of liquidity to ONRI's ONYC token. This is the type of investment our strategy contemplates. It deploys capital into Solana Native financial infrastructure with the potential to generate uncorrelated U.S. dollar denominator yield and strengthen the ecosystem our treasury depends on. Since our investment in Henri, the protocol's AUM has increased 73% from approximately $142 million to approximately $247 million at the end of June. And the total tokenized RWA capitalization of Solana has grown from approximately $2.5 billion to more than $3.3 billion over the same period. The Henri investment is also part of a broader strategy to increase our dollar denominated yield, which provides us the flexibility to grow our treasury beyond sold denominated strategies, and provide uncorrelated returns that we can use to more predictably offset dollar-denominated operating costs. Our CFO, Mark, will share more on how Forward has executed this year on reducing our SG&A costs since adopting our sole treasury strategy. Our investment in Henri is an example of a highly synergistic opportunity for Forward, where we can both invest in a company and attract valuation and create our own catalysts, providing liquidity while supporting the broader Solana ecosystem. Following the success of our honoree investment, we continue to assess other investment strategies that diversify the yield forward generates while also delivering value for our shareholders. Let me now spend a moment on M&A because it has become a more visible part of our strategy this quarter. The digital asset treasury sector is crowded and a number of vehicles now trade at a significant and persistent discount to the value of the assets that they hold. We believe this condition is unsustainable and that there is an opportunity for the sector to consolidate around a small number of scaled, credible operators. As the largest Solana Treasury by both net asset value and total sole held, and being larger than the next three Solana Treasury companies combined, Ford absolutely intends to play a lead role in industry consolidation. To be clear, an acquisition target doesn't need to be a Solana Treasury itself. We're open to combining with companies holding other digital assets as well. In those cases, we convert the acquired asset to SOL, and that conversion is factored directly into how we value the transaction. For Forward and our shareholders, these acquisitions are unique opportunities to drive step-function growth in our treasury while delivering SOL per share accretion. The shareholders of potential targets, combining with Ford, offers a path to closing persistent discounts to the treasury value and to join the larger salon treasury company with a strong balance sheet and a clear track record of delivering both treasury growth and sole per share accretion. Our approach to acquisitions follows the same arithmetic as everything else we do. A transaction has to be accreted for our shareholders on a sole per share basis and increase the scale of our sole treasury. is actively considering and pursuing M&A opportunities, and we will share more as things develop. With that, I'll turn it over to Mark to cover the financials.

Thank you, Ryan, and good afternoon, everyone. Revenue for the fiscal third quarter was $10.8 million, compared to $2.5 million in the prior year period, with the increase driven primarily by staking and treasury-related revenue. Gross margin was 62.2%, compared to negative 24.9% in the prior year period. SG&A expense was $7.4 million compared to $1.9 million in the prior year period, with the caveat that our sole treasury strategy launched in September 2025. Excluding stock-based compensation of $3.1 million, SG&A was $4.3 million. We run the company with a small team and a lean cost structure by design, because every dollar of overhead is a dollar not compounding in the treasury. At the beginning of this year, we committed to reducing SG&A, and I am happy to report that as of this quarter, we continue to be on track to bring down our average quarterly SG&A expense, excluding stock-based compensation, to 4.8 million on a go-forward basis. Our results for the quarter include loss on digital assets of 49.8 million and an impairment of 15.2 million, which is related to our ForwardSol and OnYC holdings. As a reminder, This treatment is required under US GAAP and reflects changes in the estimated fair value of our sole position during the period. It does not reflect realized sales. We encourage investors to evaluate the Treasury on the operating metrics Ryan walked through, sole held and sole per share, alongside the GAAP results. Net loss for the quarter was $69.0 million, or $0.8 per share, compared to a net loss of $850,000 or $0.77 per share in the prior year period. Turning to the balance sheet and our capital position, we ended the quarter with cash of $11.0 million. The carrying value of our sole and sole equivalent holdings as of June 30th was $556.9 million, bringing our total digital treasury assets to $576.6 million. Total debt outstanding was $105 million, under the Galaxy facility as an average weighted interest rate of 2.6%. Leverage against the Treasury remains modest in the mid to high teens and we intend to continue being deliberate and intentional with how we utilise debt. The balance sheet is built to manage volatility and operates through drawdowns while also providing us flexibility to maximise the opportunities that the market provides us. With regards to our share counts, Common shares outstanding at quarter ends were approximately 73.8 million compared to 76.3 million as of March 31st. The change reflects 94,000 shares issued under the ATM program and 2.6 million shares repurchased. Fully diluted shares, including warrants and options, were approximately 103.5 million at quarter ends. Finally, on liquidity, between cash on hand, staking rewards, Availability under the ATM program and our credit capacity, we believe we are well positioned to execute on our strategy through varying market conditions. With that, I'll hand the call to Georgia for an update on the regulatory landscape.

Thank you, Mark. Before Kyle closes, I'd like to spend a moment on the regulatory landscape because the quarter ended June 30 saw continued and, in our view, meaningful movements toward a defined framework for digital assets in the United States. First, on the legislative side, the Senate Banking Committee advanced the Digital Asset Market Clarity Act on May 14th, and on June 1st, the bill was placed on the Senate legislative calendar, making it formally eligible for floor consideration. Early in the morning on Saturday, August 8th, Senate Majority Leader Thune filed cloture on the motion to proceed with the Clarity Act, and a vote is expected on September 15th when Congress is back in session. The legislation as advanced would allocate jurisdiction over digital commodity spot markets to the CFTC while preserving SEC jurisdiction over digital securities. This legislation will require a supermajority of 60 votes, and I encourage everyone listening to this call to email or call your senators immediately and urge them to vote in favor of this bill. This piece of legislation provides the certainty that has kept builders and developers from engaging in our industry or sent them offshore and could be a significant catalyst to the Solana ecosystem, especially here in the U.S. That being said, Forward is in no way dependent upon the passage of the Clarity Act, and thanks to both the foresight of the Securities Act and the interpretive work of the Securities and Exchange Commission, We are able to carry out our mission with the requisite legal and regulatory confidence. And speaking of regulatory agencies, the SEC and CFTC continue to build on the March joint interpretation. On May 29th, the CFTC approved the listing of cash settled perpetual futures on registered designated contract markets, bringing onshore a product class that has developed almost entirely offshore. And in June, the two agencies issued joint requests for comment, addressing tokenized securities under the Title VII swap definitions and the harmonization of portfolio margin rules. We are grateful to the SEC and the CFTC for their continued work to harmonize and reduce regulatory and jurisdictional ambiguity for companies that operate at the intersection of public markets and digital assets. And with that, I'll turn the call over to Kyle for closing remarks.

Thanks, Georgia. Three quarters in, Forward is executing on the strategy we laid out at the end of last year. Sole per share is compounding and growing at an annualized rate of 36%. Our balance sheet is strong, and we're operating at mid-teens LTV with industry-leading access capital, allowing us to play offense when the market provides us with opportunities, whether that's accumulating sole at attractive prices or pursuing M&A. The regulatory environment is moving step-by-step, providing regulatory clarity and frameworks that will allow Solana to thrive. Solana is becoming the settlement layer for internet capital markets, and Forward owns a larger share of that network per share than we did 90 days ago. Looking at the back half of 2026, we will continue to execute on our core strategy. Grow soul per share, deploy capital with discipline, and deepen Forward's position within the Solana ecosystem. Thank you to our shareholders for your continued conviction. Operator, please open the line for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment please while we pull for questions. And our first question comes from Devin Ryan with Citizens Bank.

Please state your question.

Hey, this is Noah Katz on for Devin. Thanks for taking my questions. Appreciate all the comments today. So to start on agentic finance, we continue to see more financial activity being built around AI agents, particularly within payments and trading. So as you guys look across Solana today, where are you seeing the most credible agentic products beginning to emerge? And then for Forward specifically, how do you plan to participate more directly in the economics? Thanks.

Hey, Noah, thanks for the question. Kyle, you want to take this one?

Yeah, happy to. You know, the Solana ecosystem has been, I think, pretty ahead of the curve here on the kind of core infrastructure you need for agentic payments. They built, I think, two integrated protocols. One's called X402, built by Coinbase, and the other one's called Machine Payments Protocol, or MPP, which was developed by Stripe. and both of those implementations exist today and are kind of widely out there and being adopted by developers. Off the top of my head, I don't know which applications are using, unfortunately, those two protocols. I do know Visa has integrated MPP with Solana because I actually spoke with a guy from Visa about this a few weeks ago. But I don't know the specific startups off the top of my head. On the trading side today, you know, there's probably a new trading terminal launching on Solana every day at this point. And a pretty big number of those already facilitate agentic trading, where you can just, you know, use kind of Plod as your Plod or ChadiBT or Grok or whatever, and they have a connector that connects directly to Solana to trade. So that's already kind of widely out there and it's being done. I don't know if there's a ton of reporting on it, but it's actually happening already. In terms of how is Forward kind of participating and capturing all of that, I mean, the most direct instantiation of that is staking. All of those trades are all producing MEV. and the MAV is ultimately being captured by stakers such as Forward. We have not yet made any direct investments in that sector. We are certainly evaluating a bunch of stuff, but that space, as you can imagine, is extremely speculative and we have not yet developed the conviction to pull the trigger on anything quite yet.

That's helpful. Thank you. Thanks for that. and then switching gears a little bit on the Solana ecosystem as a whole, how are you guys thinking about the balance between continuing to grow the core sole treasury and building recurring revenue streams around it and then which parts of the ecosystem look the most capable of becoming the next meaningful contributor?

Thanks. Yeah, again, I guess I'll take this one.

You know, we started off with our first kind of major outside investment in ONRI, which is a reinsurance protocol that Ryan led the investment in. I think they've grown something like 70%, if I recall, since we invested just a few months ago. We are looking at a lot more of these types of RWA growth initiatives. These work very well for us structurally for a handful of reasons. versus, you know, because of our access to capital, you know, we're borrowing at roughly 2.6%, and we're able to deploy into various other environments at, you know, 8, 9, 10, 11%, and we can obviously capture that spread. So that's been very lucrative for us. It allows us to cover our SG&A as well as other investment opportunities. I may have misheard the question. Ryan, maybe do you want to jump in here?

Yeah, so, no, yeah, thank you for the thoughtful questions. Yeah, so we're actively looking at different RWA protocols, as Kyle mentioned. Again, we have industry-leading cost of capital at roughly 2.6% on an average basis. So the more that we can find these high single-digit, low double-digit yield opportunities, we can continue to effectively grow our dollar-dominated cash flow. that offsets our dollar-denominated cost structure, both in terms of SG&A and interest expense. In the case of Henri, we also had the minority investment vis-a-vis the equity. We're able to create our own catalyst where we grew AUM pretty significantly post our involvement, and we'll look to do the same across other reinsurance players, royalties, credit, a whole host of other yield-bearing dollar-denominated asset classes that are not correlated whatsoever with Solana price, but while pushing the Solana ecosystem forward as a whole. Hopefully that answers your question, but maybe I missed a part of it.

No, that's great. Thanks for answering my questions. Appreciate it.

Your next question comes from Fedor Shabalin with B. Reilly Securities. Please state your question.

Thank you very much, operator, and good afternoon, everyone. My first question is strategy-wise, like overall industry-wise. So tokenized real-world asset market cap on Solana went up on several quarters, and other metrics up, and you cited accelerating transaction activity, and we can see special app revenue growing. Yet Solan is down roughly 50-plus percent year over year. In your opinion, what breaks the disconnect between usage of this network and price? Thank you.

Hi, Fedor. Thanks for the question. Yeah, I mean, I guess first taking a step back, Any time as an investor where you see price kind of decoupling from fundamentals, in this case, you know, in an attractive way, where fundamentals are improving and prices are dropping, that's actually what's kind of given us the confidence to continue to scale our sole holdings, as you've seen with our results. In terms of the catalyst to kind of break that trend, You know, no one has a crystal ball. I think there's a lot of macro forces at play that doesn't really have anything to do with Solana Fundamentals. And you're kind of seeing that across the broader crypto ecosystem. For Solana specifically, there are a couple initiatives that are being contemplated, which will kind of improve the value accrual to the token network. which could act as a near-term, medium-term catalyst that kind of gets the ball rolling for Solana specifically. But overall, I mean, we are seeing more developers coming to Solana. We're seeing more usage. We're seeing more TVL, more AUM. You know, just on the RWA side, again, going from $2.5 billion to $3.3 billion plus. You know, that's real growth, right? It's not just Honoree. It's the broader ecosystem as well. markets get dislocated as we've seen, you know, week to week, month to month, even year to year. We're using this as a prime opportunity to lean into that dislocation and we're willing to bet that the market will eventually catch up to our opinion.

Thank you very much, Ryan. And my follow-up is on REIT and any incremental yield deployments. obviously was a very successful investment, and you've committed up to 25 mil of liquidity. Sorry if I missed, but how much of that committed is actually deployed today, and what would it take to upsize it, and maybe should we see ONRI upsizing or ONRI-like deployments in the near term? Thank you.

I'm not sure if we publicly disclose the exact amount of ONYC. I know it's alluded to in the cap table in terms of the quantum, but what we have deployed is public, so I believe it's in the low $20 million area in terms of the ONYC token itself. And again, that will go up to the $25 million.

Yeah, sorry, just to jump in here. As of the end of June, I think we've publicly disclosed that we've invested approximately $17 million of deployment into the NYC token, and that's on top of our initial investment in the entity. So, yeah, we're very close to, you know, we're over halfway of what we've committed to deploying in 25 minutes. Thanks for that, Mark.

Yeah, so I think the other part of your question is what would cause us to go further. What was the other part of your question, Fedor? Just want to make sure.

Yeah. Yeah, sure. How likely we can see just maybe upsizing of ONRI or ONRI-like deployments in the near term, call it for the balance of 2026?

Yeah, I mean, we're always evaluating different RWA and just general M&A opportunities, both DAT and non-DAT, and also minority investments as well, similar to the ONRI situation. We don't have anything that we would like to publicly disclose at this moment, but we do have a robust pipeline and some targets are further along than others. There is a chance that one or a couple could be announced before year end, but nothing specifically to share at this time. with Henri specifically. Yeah, we're getting a great return of 12% net of fees that are completely uncorrelated to literally everything. It's more weather related. So, you know, really good from a portfolio construction perspective, you know, not tied to macro, not tied to crypto price, not tied to really anything. Similarly, we'll look at other things as we try to build this RWA basket where we're kind of creating our own catalysts where we'll have equity upside in the entity that we are partnering and investing in, and then also providing liquidity in a way that is accretive to our shareholders, picking up a positive US dollar-denominated cash flow spread relative to our cost of capital. And again, these are way more stable, uncorrelated cash flows that dramatically de-risk our business and de-risk our capital structure. and we think just make us a much more attractive overall total return opportunity. So in a downside scenario, we're still outperforming Solana. In an upside scenario, you know, you're getting Sol++ type exposures. So we're really trying to make this as attractive of a risk-reward as possible here at Forward.

Thank you, Ryan.

Thank you, Mark, for your perspective and continuing best of luck. This concludes today's conference call.

Thank you for joining Forward Industries' fiscal third quarter 2026 earnings call.