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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934]: For the fiscal year ended September 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934: For the transition period from to
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Commission file number 0-6669
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FORWARD INDUSTRIES, INC.
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(Name of small business issuer in its charter)
New York 13-1950672
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
275 Hempstead Turnpike, West Hempstead, NY 11552
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(Address of principal executive offices) (Zip Code)
(516) 564-1100
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(Issuer's Telephone Number, including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
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(Title of class)
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $17,871,697
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days:
Approximately $3,614,905, based on the average of the closing bid
price ($0.563) and closing asked price ($0.750) as reported on the
NASDAQ SmallCap Market on December 23, 1996.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
As of December 23, 1996, 5,922,282 Shares of Common Stock, $.01 par
value
Transitional Small Business Disclosure Format: Yes ; No X
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The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-KSB for
its fiscal year ended September 30, 1996, as set forth herein:
Cover Page
PART III
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
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PART III
ITEM 10 - EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 1996, 1995 and 1994
The following table sets forth certain summary information
regarding all cash and non-cash compensation paid by the Company during Fiscal
1996, Fiscal 1995 and Fiscal 1994 to each of its executive officers earning
more than $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------------- ----------------------------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary Compensation Options Compensation
- ------------------ ---- ------ ------------ ------- ------------
<S> <C> <C> <C> <C>
Theodore H. Schiffman, 1996 $275,000 300,000 shares(c)
Chairman of the Board,
Chief Executive Officer
1995 $275,000 300,000 shares
1994 $275,000
Michael Schiffman, 1996 $112,500 300,000 shares(c)
Executive Vice President
1995 $150,000 $76,500(a)(b) 300,000 shares
1994 $125,000
</TABLE>
(a) Fair market value of 408,000 shares of the Company's Common
Stock issued to Michael Schiffman as of August 3, 1994.
(b) Does not include rental value of apartment and related
expenses provided to Mr. Schiffman, aggregating
approximately $9,000 per month since July 1995, while on
Company assignment in Hong Kong.
(c) Cancelled in December 1996.
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EMPLOYMENT AGREEMENTS
Effective October 1, 1994, the Company entered into an
employment agreement with Theodore H. Schiffman (the "Agreement") pursuant to
which Mr. Schiffman is employed as Chief Executive Officer of the Company
through September 30, 1997. The Agreement provides for an annual salary of
$275,000 plus annual bonus compensation generally equal to 5% of net pre-tax
annual income of the Company in excess of $1,000,000 (which is determined
without taking into consideration bonus compensation payable to any employee,
including Mr. Schiffman). If the Agreement is terminated as a result of
disability or if Mr. Schiffman should die, in each case prior to the end of
his employment term, then the Board of Directors would determine in good faith
the bonus, if any, payable to him or to his estate. If Mr. Schiffman becomes
incapacitated so as to be unable to perform his services for a period of 120
consecutive days or 150 days in any period of 365 days, the Company is
entitled to terminate the Agreement, in which event the Company is required to
retain Mr. Schiffman as a consultant for a period equal to the shorter of the
period of disability or five years, at a rate equal to 75% of his salary at
the time of termination of employment. Such compensation will be paid to Mr.
Schiffman until the earlier to occur of the end of his employment term (e.g.,
September 30, 1997), the expiration of the five-year consulting period, or his
death; and after the end of his employment term until the earlier to occur of
the expiration of his consulting period or his death, at a rate equal to 60%
of salary, in each case less whatever sums may be paid to Mr. Schiffman
pursuant to any disability insurance, the premiums for which have been paid by
the Company. If Mr. Schiffman dies during his employment term, and if the
Company is the recipient of at least $1,000,000 of proceeds of insurance on
his life, the Company will pay to his widow, or if his wife has predeceased
him, his estate, a monthly death benefit of $10,000 for a ten-year period. If
the Company is not the recipient of at least $1,000,000 of insurance, such
monthly death benefit will be paid for a period of three years, followed by a
monthly death benefit of $5,000 for seven years; if his widow dies prior to
the end of such ten year period, such payments will cease. In the event that
the Agreement is breached by the Company (which would include failure of Mr.
Schiffman to be elected to his office and as a director of the Company), which
breach is not cured within 30 days after notice from Mr. Schiffman, Mr.
Schiffman is entitled to terminate his obligations under the Agreement and the
Company would continue to remain obligated to compensate Mr. Schiffman as
provided in the Agreement (including payment of death benefits), which
compensation would be reduced by any compensation received by Mr. Schiffman
from other employment.
Effective November 1, 1994, the Company entered into an
employment agreement with Michael Schiffman, employing Mr. Schiffman as
Executive Vice President of the Company through October 31, 1997 at an annual
salary of $150,000, plus annual bonus compensation generally equal to 7.5% of
net annual pre-tax income of the Company in excess of $1,000,000 (which is
determined without taking into consideration bonus compensation payable to any
employee, including Mr. Schiffman). If his employment agreement is terminated
as a result of disability or if Mr. Schiffman should die, in each case prior
to October 31, 1997, then the Board of Directors would determine in good faith
the bonus, if any, payable to him. The balance of the terms of Michael
Schiffman's employment agreement are substantially identical to those of
Theodore Schiffman's employment agreement, except that Michael Schiffman's
agreement provides that the monthly death benefit would be $5,500 if the
Company were the recipient of at least $1,000,000 of proceeds of insurance on
his life, and $2,750 if the Company did not receive such insurance payment.
Effective October 14, 1996, the Company entered into an
employment agreement (as amended, the "Agreement") with William Mooar,
pursuant to which Mr. Mooar will serve as President of the Company and perform
duties for the Company of a senior executive nature. Simultaneously, Mr. Mooar
became a director of the Company. Mr. Mooar is employed at an annual base
salary of $150,000, received a signing bonus of $30,000 and will receive
incentive compensation with respect to each fiscal year of the Company ending
during the term of the Agreement equal to the product of (i) $100,000, and
(ii) a fraction, the numerator of which will be the Company's audited pre-tax
opening profit (if any) for such fiscal year and the denominator of which will
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be $500,000. The Agreement provides that, subject to shareholder approval, Mr.
Mooar will receive an option to purchase 300,000 shares of the Company's
common stock, par value $.01 per share, at an exercise price equal to the fair
market value of such shares as of the date of the approval of the shareholders
of the Company thereof. The option will vest in four equal semi-annual
installments commencing October 14, 1996, provided that Mr. Mooar continues in
the Company's employ at each such vesting date. If such option is not approved
by the Company's shareholders by March 30, 1997, the Company is required to
sell Mr. Mooar on such date 300,000 shares of common stock at a price equal to
the fair market value of such shares on such date, in lieu of such option,
subject to Mr. Mooar's obligation to resell to the Company, at his purchase
price, up to 225,000 of such shares on termination of his employment with the
Company depending on when his employment terminates. The Agreement also
provides that, subject to shareholder approval, the Company will grant Mr.
Mooar an additional option (the "Incentive Option) to purchase an additional
500,000 shares of Common Stock if the Company's audited pre-tax operating
income for its 1997 or 1998 fiscal year is at least $1 million. The Incentive
Option, if earned, will be granted as of the date that the Company's
independent auditors certify the Company's year-end financial statements which
reflect achievement of the required pre-tax operating income. The Incentive
Option will vest in four equal semi-annual installments commencing six months
after the date of grant if Mr. Mooar is employed by the Company at such time,
and will expire ten years after the date of grant. The Agreement expires
October 13, 1998; however, the Company has the right to terminate the
Agreement during the first 90 days thereof without cause and without incurring
any termination obligation to Mr. Mooar.
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OPTION GRANTS
OPTIONS GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
Percentage of
Number of Total Options
Underlying Granted
Name Shares in Fiscal Year Exercise Price Expiration Date
- ---- --------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Theodore H. Schiffman 300,000 (a) 24.3% $5.775 2/12/2002
Michael Schiffman 300,000 (a) 24.3% $5.775 2/12/2002
</TABLE>
(a) Cancelled in December 1996.
STOCK OPTIONS HELD AT END OF FISCAL 1996
The following table indicates the total number of
exercisable and unexercisable stock options held by each executive officer
named in the Summary Compensation table as of September 30, 1996. No options
to purchase Common Stock were exercised during Fiscal 1996 and no stock
appreciation rights were outstanding during Fiscal 1996.
<TABLE>
<CAPTION>
Value of In-the-Money
Number of Securities Securities Underlying
Underlying Unexercised Unexercised Options at
Options at September 30, 1996 September 30, 1996(1)
----------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Theodore H. Schiffman 300,000 300,000(2) $675,000 $675,000
Michael Schiffman 300,000 300,000(2) $675,000 $675,000
</TABLE>
1 Based on closing bid quotation of $2.25 per share on September 30, 1996
2 Cancelled in December 1996
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ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information, as of December 31, 1996,
with respect to the beneficial ownership of the Common Stock by (i) each
person or group who is known by the Company to be the beneficial owner of 5%
or more of the outstanding Common Stock, (ii) each of the directors of the
Company, (iii) each of the executive officers of the Company named in the
compensation table under Item 10 - "Executive Compensation", and (iv) all
directors and executive officers of the Company, as a group (six persons).
<TABLE>
<CAPTION>
Number of Shares Percent
Identity of Beneficial Owners Of Common Stock of Class
- ----------------------------- ---------------- --------
<S> <C> <C>
Theodore H. Schiffman 742,200 shares (a)(b)(c) 11.9%
275 Hempstead Turnpike
West Hempstead, New York 11552
William E. Mooar 300,000 shares (d) 4.8%
541 Westover Road
Stamford, Connecticut 06902
Michael Schiffman 800,654 shares (b)(c) 12.9%
275 Hempstead Turnpike
West Hempstead, New York 11552
Stephen Schiffman 107,070 shares 1.8%
275 Hempstead Turnpike
West Hempstead, New York 11552
Noah Fleschner 660 shares *
275 Hempstead Turnpike
West Hempstead, New York 11552
All directors and executive 1,950,584 shares (a)(b)(c)(d) 28.6%
officers as a group
</TABLE>
(a) Includes 81,400 shares owned by Mr. Schiffman's wife, as to
all of which shares Mr. Schiffman disclaims beneficial ownership.
(b) Includes shares subject to options granted by the Company on
October 12, 1994 to each of Theodore H. Schiffman and
Michael Schiffman to purchase 300,000 shares of the
Company's Common Stock at an exercise price of $0.75 per
share during the five-year period commencing December 1,
1995.
(c) Theodore H. Schiffman, the Chairman of the Board and the
Chief Executive Officer of the Company, is the father of
Michael Schiffman, the Executive Vice President and a
director of the Company and Stephen Schiffman, the Secretary
of the Company, and the brother of Cheryl Fenster Fishoff.
Each of Theodore H. Schiffman, Michael Schiffman, Stephen
Schiffman and Cheryl Fenster Fishoff disclaims beneficial
ownership of shares beneficially owned by the
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others.
(d) Includes options to purchase 300,000 shares subject to shareholder
approval of such options (provided, that if such approval is not
obtained prior to March 30, 1997, the Company has agreed instead to
sell Mr. Mooar 300,000 shares for the fair marker value as of such
date) at fair market value on the date of such approval. Such options
(or shares, as the case may be,) vest in four equal installments of
75,000 every six months commencing October 14, 1996. Does not include
options to purchase up to 500,000 shares which the Company has agreed
to grant Mr. Mooar, subject to shareholder approval, on achievement of
certain income levels.
* Less than 1.0%.
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ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has made unsecured loans from time to time to
Mr. and Mrs. Theodore H. Schiffman and to Mr. Schiffman's son Michael
Schiffman. As of September 30, 1995, (a) Theodore A Schiffman executed a
promissory note to the Company in the principal amount of $235,535, bearing
interest at 6% per annum, payable annually on September 30 of each year,
commencing September 30, 1996, with the first four installments each in the
sum of $50,000 and the remaining installment in the sum of the balance due,
and (b) Michael Schiffman executed a similar note in the principal amount of
$50,000, bearing interest at 7% per annum, payable in equal annual
installments of $10,000 each September 30 commencing September 30, 1996
through September 30, 2000. The balance of the loan to Mrs. Schiffman at
September 30, 1996, $3,822, is due on demand with interest of 6% per annum.
Theodore H. Schiffman's son, Stephen Schiffman, is employed
by the Company at an annual salary of $32,000. Stephen Schiffman is an
administrator of the Company's Terrapin(TM) line of notebook computer carrying
cases.
On September 1, 1995, the Company borrowed $100,000 from
Carl Waldman, uncle of Theodore H. Schiffman, for a term of five years
pursuant to a promissory note bearing interest at 10% per annum.
On September 11, 1995, the Company borrowed $400,000 from
Cheryl Fenster Fishoff, a principal shareholder of the Company and the sister
of Theodore H. Schiffman, pursuant to a Convertible Note bearing interest at
1% over the prime rate as published in The Wall Street Journal and due on
September 10, 2000, unless converted to shares of Common Stock of the Company.
The Note provides that it may be converted, in whole or in part, into such
Common Stock at any time at the conversion price of $2.00 per share. In
December and January of 1995 the Company borrowed an additional $157,200 from
Mrs. Fishoff pursuant to a Convertible Note due on December 18, 2000 and
otherwise under the same terms and conditions. On February 12, 1996 Mrs.
Fishoff exercised her option to convert here debt into 278,600 Shares of
Common Stock. The proceeds of these loans were used to fund working capital
obligations of the Company.
Theodore H. Schiffman and Cheryl Fenster Fishoff have each
guaranteed payment to the landlord of the Brooklyn Facility of the Company's
promissory note in the principal amount of $170,000 given in connection with
the termination of the lease for the Brooklyn Facility.
The Company has incurred indebtedness created in connection
with letters of credit extended for the benefit of the Company by a
corporation controlled by the spouse of Cheryl Fenster Fishoff. The Company
pays such corporation a commission of 5% of the amount of the letters of
credit, together with expenses related to opening and collection of such
letters of credit, and interest on the open balances thereof at 1.5% over the
prime rate of the issuing bank. At September 30, 1996, $53,900 of such
indebtedness was outstanding. During Fiscal 1996, the Company incurred
interest on open letters of credit in the amount of $47,475.
Stanley Schlesinger, former Secretary of the Company, is a
partner in the law firm of Warshaw Burstein Cohen Schlesinger & Kuh, former
general counsel to the Company. The Company incurred legal fees to such firm
in the amounts of $355,296, $145,486 and $63,473 during Fiscal 1996, 1995 and
1994 respectively, for legal services rendered during and prior to each such
year and for disbursements in connection therewith.
As of August 3, 1994, the Company issued 408,000 shares of
Common Stock to Michael Schiffman in consideration for past services rendered
to the Company for which the Board of Directors determined that Mr. Schiffman
had not been adequately compensated, and for Mr. Schiffman's release of any
claim for additional compensation for past services rendered.
On December 27, 1994, Michael Schiffman made a capital
contribution of $200,000 to the Company to be utilized for working capital
purposes.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report on Form 10KSB/A to be signed on its behalf
by the undersigned, hereunto duly authorized.
Dated: January 10, 1997 FORWARD INDUSTRIES, INC.
/s/ Theodore H. Schiffman
By:
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Theodore H. Schiffman
Chairman; Chief Executive Officer and
Chief Financial Officer
In accordance with the Exchange Act, this report on Form
10KSB/A has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
January 10, 1997 /s/ Theodore H. Schiffman
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Theodore H. Schiffman
Chief Executive Officer; Chief Financial Officer;
Director (Principal Executive Officer and Financial
and Accounting Officer)
January 10, 1997 /s/ Michael Schiffman
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Michael Schiffman
Executive Vice President and Director
January 10, 1997 /s/ Noah Fleschner
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Noah Fleschner
Director
January 10, 1997 /s/ William E. Mooar
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William E. Mooar
President and Director
January 10, 1997 /s/ Stephen Schiffman
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Stephen Schiffman
Secretary
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