This Prospectus Supplement relating to
Registration Statement No. 33-99338 is
filed pursuant to Rule 424(b)(3) under
the Securities Act of 1933.
SECOND SUPPLEMENT TO MARCH 25, 1996 PROSPECTUS OF FORWARD INDUSTRIES, INC.
On June 13, 1996, Forward Industries, Inc. (the "Company") entered
into a non-binding letter of intent to acquire, subject to certain conditions,
the assets and business of Coast Manufacturing Company, a Delaware corporation
("Coast"). Coast is a distributor of carrying cases for cameras, camcorders,
laptop computers, compact discs and cassette tapes to the retail audio, video,
photo and computer aftermarkets. Coast's customers have included Circuit City,
Kmart, Target, Service Merchandise, Best Buy, Incredible Universe, Radio Shack
and WalMart. Coast's products are manufactured to its specifications primarily
in the Far East and Dominican Republic. For the year ended December 31, 1995,
based on unaudited financial information supplied by Coast to Forward, Coast had
sales of approximately $16.4 million, a pre-tax loss of approximately $3.5
million (of which approximately $1.3 million was from operations) and a net loss
of approximately $2.1 million.
The letter of intent contemplates that, upon fulfillment of certain
conditions, the Company would contribute $2 million to a new subsidiary which
would then acquire all of Coast's assets and business and assume specified
liabilities to be agreed (including term debt and accounts payable). The
Company currently does not have sufficient funds to consummate the proposed
transaction and there can be no assurance that the Company will be able to
obtain such funds. The Company contemplates that a portion of the proceeds from
the exercise of its outstanding Warrants will be utilized in the acquisition if
the transaction is consummated. See "Use of Proceeds" in the Prospectus. The
letter of intent also contemplates that, upon consummation of the transaction,
Bill Mooar, President of Coast, would become President of the Company (at an
initial annual compensation of $150,000 to be increased to $250,000 upon
achievement of performance objectives to be agreed) and would receive 250,000
shares of Common Stock (representing approximately 4.8% of the outstanding
Common Stock as of the date of this Supplement) and, subject to shareholder
approval, would be granted options to acquire an additional 400,000 shares of
Common Stock at fair market value on the date of grant subject to the Company
achieving a threshold consolidated net income for the first full fiscal year
following such consummation, in an amount to be agreed.
Consummation of the proposed transaction is subject to a number of
conditions, including negotiation and execution of definitive agreements,
restructuring of Coast's outstanding liabilities to discount approximately $6.4
million of subordinated debt to no more than $1.25 million and its accounts
payable by at least $1 million, the receipt by Coast of an additional $1 million
term loan from its current senior lender and completion by the Company of its
due diligence. In light of such conditions, there can be no assurance that the
proposed transaction will be consummated on the terms set forth in the letter
of intent, or at all. Coast has agreed that, until October 11, 1996, it will
not engage in any activity which could lead to its acquisition by a third party,
in order to enable the Company to complete its due diligence and
negotiate definitive agreements. There can be no assurance that any
transaction with Coast, if consummated, ultimately would be beneficial to the
Company.
Dated: June 21, 1996
