In a recent transaction, Forward Industries, Inc. (NASDAQ:FORD), a New York-based company specializing in plastic products, has addressed a portion of its outstanding debts through an agreement with a related party.
On June 28, 2024, the company entered into an Accounts Payables Conversion Agreement with Forward Industries (Asia-Pacific) Corporation, which is owned by Forward Industries' CEO and Chairman of the Board.
Under the terms of the agreement, Forward Industries will issue new preferred stock valued at $1.7 million to Forward Industries (Asia-Pacific) Corporation in exchange for the forgiveness of the same amount of debt owed. This debt conversion is contingent upon the acceptance of a Certificate of Amendment by the Secretary of State of New York, which will authorize the newly created preferred shares.
The specifics of the preferred stock, including rights, obligations, and preferences, will be disclosed in a subsequent Current Report on Form 8-K following the acceptance of the Certificate of Amendment. The issuance of preferred stock is a strategic move by Forward Industries to manage its payables effectively while potentially strengthening its balance sheet.
The agreement between Forward Industries and its CEO's company is a notable event as it reflects an internal decision to restructure the company's financial obligations. It is important to note that Forward Industries has taken a formal route to address its accounts payable, ensuring transparency and regulatory compliance as evidenced by the filing of the Form 8-K with the Securities and Exchange Commission.
Investors and stakeholders of Forward Industries may view this development as a proactive step towards improving the company's financial health. The conversion of debt into equity can also have implications for the company's financial ratios and future borrowing capacity.
As per standard procedure, Forward Industries' Chief Financial Officer, Kathleen Weisberg, signed off on the report filed on July 3, 2024. Further details regarding the preferred stock and its impact on the company's financial structure will be awaited in the upcoming SEC filings. This information is based on a press release statement.
In other recent news, Forward Industries Inc. has announced a 1-for-10 reverse stock split of its common stock, set to take effect in June 2024. The decision, approved by shareholders earlier in the month, is a strategic move aimed at meeting the Nasdaq's $1.00 minimum bid price requirement for continued listing. The reverse stock split will consolidate ten shares of existing common stock into one share, with no alteration to the par value or the authorized number of shares.
All equity awards, warrants, and convertible notes will be subject to proportional adjustments as per the terms of existing agreements, and no fractional shares will be issued. Registered stockholders with pre-split shares in electronic, book-entry form do not need to take any action to receive post-split shares.
Still, the company has clarified that there is no guarantee that the reverse stock split will enable it to meet the minimum bid price requirement over a sufficient period to regain compliance. These developments are part of Forward Industries' recent efforts to comply with Nasdaq's listing requirements.
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