Forward Industries converts debt to equity to meet NASDAQ compliance By Investing.com

In a strategic move to address compliance with NASDAQ’s listing requirements, Forward Industries, Inc. (NASDAQ:FORD) has converted a significant portion of its debt into equity. The New York-based plastics products manufacturer announced on Monday that it entered into an Account Payables 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 shares of the newly designated 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, according to Section 4(a)(2) and Rule 506(b) of Regulation D.

Simultaneously, Forward Industries filed a Certificate of Amendment of the Certificate of Incorporation, effectively creating the new Series A-1 Convertible Preferred Stock. This stock, which ranks senior to all classes of common stock in asset distribution upon liquidation, dissolution, or winding up, carries no voting rights and is not redeemable. The conversion price is set at $7.50 per share, adjustable under certain conditions, and is subject to a 19.9% conversion blocker.

This corporate restructuring is a response to NASDAQ’s notification that Forward Industries was not meeting the Stockholders’ Equity Rule, which requires a minimum of $2.5 million in stockholders’ equity. The company was given until July 9, 2024, to regain compliance. Following the conversion agreement, Forward Industries believes it now meets this requirement.

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

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

In other recent news, Forward Industries, announced a 1-for-10 reverse stock split of its common stock. The move, approved by shareholders, is aimed at meeting Nasdaq’s minimum bid price requirement for continued listing. The reverse stock split will consolidate ten existing common stock shares into one, without altering the par value or the authorized number of shares.

The firm has stated that equity awards, warrants, and convertible notes will undergo proportional adjustments according to existing agreements. No fractional shares will be issued, with shareholders receiving rounded-up whole shares instead.

InvestingPro Insights

In light of Forward Industries’ recent strategic financial maneuvers, real-time data from InvestingPro provides additional context for investors monitoring the company’s performance. As of the last twelve months, Forward Industries has a market capitalization of $3.97 million and is trading at a low revenue valuation multiple, which could be appealing for value investors seeking underpriced stocks. However, the company has experienced a revenue decline of 10.04%, reflecting challenges in its financial growth.

InvestingPro Tips highlight that Forward Industries’ stock has encountered significant price volatility and has seen a substantial decrease over the last year, with a price total return of -60.43%. This could indicate a higher risk for investors, but also potential for rebound if the company successfully stabilizes its operations. Additionally, Forward Industries does not currently pay a dividend, which may influence investment decisions for income-focused shareholders.

For investors seeking a deeper analysis, there are 9 additional InvestingPro Tips available, which could provide further guidance on whether Forward Industries is poised for a recovery or if caution is warranted. To access these insights and enhance investment strategies, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.