Forward Industries Converts Debt to Equity to Comply with NASDAQ By Investing.com

As part of a strategic move to comply with NASDAQ listing requirements, Forward Industries, Inc. (NASDAQ: FORD) has converted a significant portion of its debt into equity. The New York-based plastic products manufacturer announced Monday that it has entered into an accounts payable conversion agreement with Forward Industries (Asia-Pacific) Corporation, converting $1.7 million of debt into Series A-1 convertible preferred stock on July 5, 2024.

The conversion, approved by a special committee of the Company’s board of directors, involves 1,700 newly designated shares of Series A-1 convertible preferred stock, each with a stated value of $1,000. This transaction is exempt from registration under the Securities Act of 1933, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D.

Concurrently, Forward Industries filed a certificate of amendment to the certificate of incorporation, thereby creating the new Series A-1 convertible preferred stock. These shares, which rank ahead of all classes of common stock in the distribution of assets in the event of liquidation, dissolution or winding-up, carry no voting rights and are not redeemable. The conversion price is set at $7.50 per share, adjustable under certain conditions, and are subject to a 19.9% ​​conversion lock-up.

This corporate restructuring is a response to NASDAQ’s notification that Forward Industries was in non-compliance with the equity rule, which requires a minimum of $2.5 million in equity. The company had until July 9, 2024 to regain compliance. Following the conversion agreement, Forward Industries believes it now meets this requirement.

Earlier this year, the company faced another compliance issue with NASDAQ regarding the minimum offering price rule. To address this issue, Forward Industries conducted a 1-for-10 reverse stock split on June 18, 2024. The company now believes it has also satisfied the minimum offering price requirement.

As Forward Industries awaits NASDAQ’s final determination regarding its compliance, there remains uncertainty regarding the continued listing of its common stock on the NASDAQ Capital Market. The Company has taken significant steps to rectify its situation and is hopeful of a positive outcome.

In addition, Forward Industries recently announced a 1-for-10 reverse stock split of its common stock. This action, approved by shareholders, is intended to satisfy Nasdaq’s minimum offering price requirements for continued listing. The reverse stock split will consolidate ten existing shares of common stock into one share, without changing the par value or authorized number of shares.

The company said stock awards, warrants and convertible bonds will be adjusted proportionally in accordance with existing agreements. No fractional shares will be issued, with shareholders instead receiving rounded-up whole shares.

Information about InvestingPro

In light of Forward Industries’ recent strategic financial maneuvers, InvestingPro’s real-time data provides additional context for investors monitoring the company’s performance. Over the past twelve months, Forward Industries has a market cap of $3.97 million and trades at a low valuation-to-revenue multiple, which could be attractive to value investors looking for undervalued stocks. However, the company saw its revenue decline by 10.04%, reflecting its financial growth struggles.

InvestingPro’s advice highlights that Forward Industries stock has seen significant price volatility and has seen a substantial decline over the past year, with a total price return of -60.43%. This could indicate higher risk for investors, but also the potential for a rebound if the company manages to stabilize its operations. Additionally, Forward Industries does not currently pay a dividend, which may influence the investment decisions of income-oriented shareholders.

For investors looking for more in-depth analysis, 9 additional InvestingPro tips are available that may provide additional insights into whether Forward Industries is poised for a recovery or whether caution is warranted. To access this information and enhance investment strategies, use promo code PRONEWS24 to benefit from up to 10% off an annual Pro subscription and an annual or biannual Pro+ subscription.

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