<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Forward Industries, Inc.
..............................................................................
(Name of Registrant as Specified In Its Charter)
Forward Industries, Inc.
..............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.........................................................................
2) Aggregate number of securities to which transaction applies:
.........................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
.........................................................................
4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid:
.........................................................................
1Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
........................................................................
2) Form, Schedule or Registration Statement No.:
........................................................................
3) Filing Party:
........................................................................
4) Date Filed: .........................................................
<PAGE>
FORWARD INDUSTRIES, INC.
275 HEMPSTEAD TURNPIKE
WEST HEMPSTEAD, NEW YORK 11552
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Forward Industries, Inc.
The Annual Meeting of Shareholders of Forward Industries, Inc. (the
"Company") will be held at the offices of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 551 Fifth Avenue, 25th Floor, New York, New York, at 10:00
a.m., Eastern Standard Time, on August 12, 1998, for the following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To ratify the appointment of Patrusky, Mintz & Semel as
the independent auditors and accountants for the Company
for the year ending September 30, 1998.
3. To transact such other business as may properly come
before the meeting.
All shareholders are invited to attend the meeting. Shareholders of
record at the close of business on July 13, 1998, the record date fixed by the
Board of Directors, are entitled to notice of and to vote at the meeting. A
complete list of shareholders entitled to notice of and to vote at the meeting
will be open to examination by shareholders beginning ten days prior to the
meeting for any purpose germane to the meeting during normal business hours at
the office of the Secretary of the Company at 275 Hempstead Turnpike, West
Hempstead, New York 11552.
Whether or not you intend to be present at the meeting, please sign
and date the enclosed proxy and return it in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
STEPHEN SCHIFFMAN
Secretary
West Hempstead, New York
July 13, 1998
<PAGE>
FORWARD INDUSTRIES, INC.
275 Hempstead Turnpike
West Hempstead, New York 11552
(516) 564-1100
---------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by the Board of Directors of
Forward Industries, Inc. (the "Company") for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at 10:00 a.m., Eastern Standard
Time, on August 12, 1998 at the offices of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 551 Fifth Avenue, 25th Floor, New York, New York 10176 and any
adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition
to the solicitation of proxies by mail, certain officers, consultants and
employees of the Company, without extra remuneration, may also solicit proxies
personally by telefax and by telephone. In addition to mailing copies of this
material to shareholders, the Company may request persons, and reimburse them
for their expenses in connection therewith, who hold stock in their names or
custody or in the names of nominees for others to forward such material to
those persons for whom they hold stock of the Company and to request their
authority for execution of the proxies.
The holders of a majority of the outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), present in person or represented
by proxy shall constitute a quorum at the Annual Meeting. The approval of a
plurality of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for election of the
nominees as directors. In all other matters, the affirmative vote of the
majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for the adoption of such
matters.
The form of proxy solicited by the Board of Directors affords
shareholders the ability to specify a choice among approval of, disapproval of,
or abstention with respect to each matter to be acted upon at the Annual
Meeting. Shares of Common Stock represented by the proxy will be voted, except
as to matters with respect to which authority to vote is specifically withheld.
Where the solicited shareholder indicates a choice on the form of proxy with
respect to any matter to be acted upon, the shares will be voted as specified.
Abstentions and broker non-votes will not have the effect of votes in
opposition to a director or "against" any other proposal to be considered at
the Annual Meeting.
All shares of Common Stock represented by properly executed proxies
which are returned and not revoked will be voted in accordance with the
instructions, if any, given therein. If no instructions are provided in a
proxy, the shares of Common Stock represented by such proxy will be voted FOR
the Board's nominees for director, FOR the approval of Proposal 2 and in
accordance with the proxy-holder's best judgment as to any other matters raised
at the Annual Meeting.
A shareholder who has given a proxy may revoke it at any time prior to
its exercise by giving written notice of such revocation to the Secretary of
the Company, executing and delivering to the Company a later dated proxy
reflecting contrary instructions or appearing at the Annual Meeting and taking
appropriate steps to vote in person.
At the close of business on July 13, 1998, 4,798,141 shares of Common
Stock were outstanding and eligible for voting at the meeting. Each shareholder
of record is entitled to one vote for each share of Common Stock held on all
matters that come before the meeting. Only shareholders of record at the close
of business on July 13, 1998 are entitled to notice of, and to vote at, the
meeting. All information in this Proxy Statement has been retroactively
adjusted to give effect to a one-for-two reverse stock split of the issued and
outstanding Common Stock effected on December 23, 1997.
NO DISSENTER'S RIGHTS
Under New York law, shareholders are not entitled to dissenter's
rights of appraisal with respect to Proposal 2.
This proxy material is first being mailed to shareholders commencing
on or about July 17, 1998.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The number of directors of the Company is set by a resolution adopted
by a majority of the entire Board of Directors. The number of directors is
currently fixed at four. The number of directors to be elected at the Annual
Meeting to constitute the Board of Directors has also been fixed at four. The
directors are to be elected to hold office for a period of one year, and in any
event until a successor has been elected and qualified. It is intended that the
accompanying proxy will be voted in favor of the following persons to serve as
directors, unless the shareholder indicates to the contrary on the proxy. Each
of the nominees is currently a director of the Company.
For reelection to the Board of Directors for one-year terms, the Board
of Directors has nominated the following individuals, each a current director:
THEODORE H. SCHIFFMAN
MICHAEL SCHIFFMAN
NOAH FLESCHNER
SAMSON HELFGOTT
The persons named in the accompanying proxy intend to vote for the
election as director of the nominees listed herein. Each nominee has consented
to serve if elected. The Board of Directors has no reason to believe that any
nominee will not serve if elected, but if any of them should become unavailable
to serve as a director, and if the Board of Directors designates a substitute
nominee or nominees, the persons named as proxies will vote for the substitute
nominee or nominees designated by the Board of Directors.
The following table sets forth certain information with respect to
each person who is currently a director or executive officer of the Company and
the individuals nominated and recommended to be elected by the Board of
Directors of the Company and is based on the records of the Company and
information furnished to it by such persons. Reference is made to "Security
Ownership of Certain Beneficial Owners and Management" for information
pertaining to stock ownership by each director and executive officer of the
Company and the nominees.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE POSITION WITH THE COMPANY
Theodore H. Schiffman 65 Chairman of the Board and Chief Executive Officer
Michael Schiffman 33 President, Chief Operating Officer and Director(1)
Phil Kart 48 Chief Financial Officer and Vice President(2)
Noah Fleschner 60 Director
Samson Helfgott 59 Director
Stephen Schiffman 30 Secretary
</TABLE>
Each of the directors holds office until the next annual meeting of
shareholders and until his successor has been duly elected and qualified.
THEODORE H. SCHIFFMAN, a co-founder of the Company, has been its
Chairman and Chief Executive Officer for more than the past five years and has
been a director since 1961.
MICHAEL SCHIFFMAN has been employed by the Company in various
capacities for more than the past five years and became a director of the
Company in April 1992. Beginning as a salesman for the Company's advertising
specialties products in 1985, Mr. Schiffman became marketing manager for such
products in 1987 and, following the acquisition of the custom carrying case
business in 1989, was appointed General Manager of that division. Mr. Schiffman
served as the Company's Executive Vice-President from 1992 through 1997 and
became President and Chief Operating Officer of the Company in 1998 upon
William Mooar's resignation. Michael Schiffman is the son
- ------------------
(1) Michael Schiffman served as the Company's Executive Vice President
during the fiscal year ended September 30, 1997 and was appointed
President and Chief Operating Officer of the Company in April 1998
upon William Mooar's resignation.
(2) Philip Kart was appointed Chief Financial Officer of the Company
effective February 22, 1998. Prior to Mr. Kart's employment,
Theodore H. Schiffman served as the Company's Chief Financial
Officer.
- 2 -
<PAGE>
of Theodore H. Schiffman. Mr. Schiffman is presently on assignment in
Hong Kong and will be returning to the United States in July 1998.
PHIL KART became Vice President and Chief Financial Officer
of the Company in February, 1998. Mr. Kart has 23 years of financial and
corporate planning experience. Mr. Kart served as Chief Financial Officer of
OnGard Systems Inc., a publicly held manufacturer of medical equipment, from
March, 1994 until December, 1997. From 1989 until March 1994, Mr. Kart was a
principal in Big Stone Partners, a financial consulting firm, and prior to
that, he held management positions with Agrigenetics Corporation and Union
Carbide. Mr. Kart is also a Certified Public Accountant and was employed by
Price Waterhouse. Mr. Kart received an MBA from City College of New York.
SAMSON HELFGOTT is a founding partner in the law firm of Helfgott &
Karas, P.C. Prior founding Helfgott & Karas, P.C., for 15 years Mr Helfgott
served as Counsel, in New York, to General Electric Company. Prior to his
employment at General Electric, Mr. Helfgott was a Patent Attorney for Western
Electric Company and for IBM Corporation. He has also worked in private
practice for various law firms. Mr. Helfgott holds a Doctorate of Laws degree,
cum laude, from Fordham University and is a member of the Bar of the State of
New York and is admitted to practice before the United States Patent and
Trademark Office and the Canadian Patent Office, the United States Court of
Appeals for the Federal Circuit, and the Supreme Court of the United States.
Mr. Helfgott became a director of the Company in February 1998.
NOAH FLESCHNER has been Chairman of the Board and Chief
Executive Officer of Diversified Data Equipment Corp. and Verified System
Solutions, Inc., sellers of new and used computer equipment to dealers and
commercial end-users, for more than the past five years. Mr. Fleschner is a
Certified Public Accountant. Mr. Fleschner became a director of the Company in
October 1994.
STEPHEN SCHIFFMAN has been employed by the Company in various
capacities for more than the past five years. Beginning in 1990, Mr. Schiffman
was employed in the production department, followed by a move to the Purchasing
Department and Inventory Control in the Forward Division. Subsequently, Mr.
Schiffman moved to the Marketing Department of the Koszegi division in 1995.
Presently, Mr. Schiffman is Vice-President of Marketing and Sales for Terrapin.
Stephen Schiffman is the son of Theodore H. Schiffman.
Pursuant to their respective employment agreements with the Company,
Theodore H. Schiffman is employed as Chief Executive Officer through September
30, 2000 and the Company has agreed to use its best efforts to elect him
annually as Chairman of the Board, and Michael Schiffman is employed as
President through October 31, 2000 and the Company has agreed to use its best
efforts to elect him annually as a director.
SHAREHOLDER VOTE REQUIRED
Election of each director requires a plurality of the votes of the
shares of Common Stock present in person or requested by proxy at the meeting
and entitled to vote on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION TO THE BOARD OF
DIRECTORS OF THE COMPANY FOR EACH OF THE NOMINEES.
COMMITTEES OF THE BOARD - BOARD MEETINGS
The Board of Directors does not have a nominating committee,
a compensation committee or a stock option committee. These functions are
performed by the Board as a whole. The Board of Directors has established an
audit committee to assist it in the discharge of its responsibilities, the
principal responsibilities and members of which are described below. The Board
of Directors met or acted by unanimous written consent on 5 occasions during
the fiscal year ended September 30, 1997. All directors attended 100% of the
meetings held by the Board and committees of which they are members.
The Audit Committee of the Board of Directors currently
consists of Theodore H. Schiffman, Noah Fleschner and Samson Helfgott. The
Audit Committee held one meeting during the fiscal year ended September 30,
1997. The Audit Committee is responsible for recommending the appointment of a
firm of independent public accountants to examine the financial statements of
the Company and its subsidiaries for the coming year. In making this
recommendation, it reviews the nature of audit services rendered, or to be
rendered, to the Company and its subsidiaries. It reviews with representatives
of the independent public accountants the auditing arrangements and scope of
the independent public accountants' examination of the financial statements,
results of those audits, their fees and any problems identified by the
independent public accountants regarding internal accounting controls, together
with their recommendations. It also meets with the Company's Chief Financial
Officer to review reports on the functioning of the Company's programs for
compliance with its policies and procedures regarding financial controls and
internal auditing. This includes an assessment of internal controls within the
Company and its subsidiaries based upon the activities of the Company's
internal auditing personnel as well as an evaluation of the performance. The
Audit Committee is also prepared to meet at any time upon request of the
independent public accountants or the Chief Financial Officer to review any
special situation arising in relation to any of the foregoing subjects.
- 3 -
<PAGE>
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. In 1995,
Theodore H. Schiffman executed a promissory note to the Company in the
principal amount of $235,535, bearing interest at 6% per annum, payable in
annual installments on September 30 of each year, commencing September 30, 1996
through September 30, 2000, with the first four installments each in the sum of
$50,000 and the remaining installment in the sum of the balance due, of which
$135,535 in principal amount, plus interest, remains due as of September 30,
1997, 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, of which $30,000 in principal amount remains due as of
September 30, 1997.
William E. Mooar, President of the Company until April 1998, purchased
four (4) Units in the Company's 1997 Private Placement, by way of a
self-directed retirement fund, for an aggregate of $100,000, each Unit
consisting of 30,000 shares of Common Stock, one warrant for the purchase of
30,000 shares of Common Stock and a promissory note in the principal amount of
$10,000. Accordingly, the Company is indebted to Mr. Mooar in the amount of
$40,000, pursuant to the terms of the 1997 Private Placement.
Theodore H. Schiffman's son, Stephen Schiffman, is employed by the
Company at an annual salary of $32,000. Stephen Schiffman is the Company's
Secretary and 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 $4.00 per share. In
December 1995 and January 1996 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 her debt into 139,300 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 each guaranteed
payment to the landlord of the Company's former property in Brooklyn, New York
of the Company's promissory note in the principal amount of $170,000, which
note was subsequently paid off.
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, 1997, $292,068 of such indebtedness was
outstanding. During Fiscal 1997, the Company incurred interest on open letters
of credit in the amount of $31,537 and paid commissions of $92,290.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and the other equity securities of the Company. Officers,
directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equities are required by the regulations of
the Securities and Exchange Commission to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended September 30, 1997, all Section 16(a) filing requirements applicable to
its officers, directors, and greater than ten percent beneficial owners were
complied with.
- 4 -
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding
all cash and non-cash compensation paid by the Company during Fiscal 1997,
Fiscal 1996 and Fiscal 1995 to each of its then 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> <C>
Theodore H. Schiffman, 1997 $275,000 -- 300,000 shares --
Chairman of the Board,
Chief Executive Officer,
Chief Financial Officer
1996 $275,000 -- 150,000 shares (a) --
1995 $275,000 -- 150,000 shares --
Michael Schiffman, 1997 $150,000 -- (d) 300,000 shares --
Executive Vice President (b)
1996 $112,500 -- (d) 150,000 shares (a) --
1995 $150,000 $76,500 (c)(d) 150,000 shares --
William Mooar, President 1997 $150,000 $30,000 (e) 150,000 shares (f) --
1996 -- -- -- --
1995 -- -- -- --
</TABLE>
(a) Canceled in December 1996 and replaced with a like number of options.
(b) Michael Schiffman served as Executive Vice President of the Company
during the fiscal year ended September 30, 1997, and was appointed
President in April 1998 upon William Mooar's resignation.
(c) Fair market value of 204,000 shares of the Company's Common Stock
issued to Michael Schiffman as of August 3, 1994.
(d) 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. Mr.
Schiffman is expected to return to the United States in July 1998.
(e) Signing bonus received upon entering into employment agreement with
the Company.
(f) William Mooar served as President of the Company until his resignation
in April 1998, at which time Michael Schiffman was appointed President
and Chief Operating Officer of the Company. As of April 1, 1998, Mr.
Mooar held vested and exercisable options for the purchase of an
aggregate of 75,000 shares of Common Stock all, of which have since
been exercised. The balance at such options were canceled.
- 5 -
<PAGE>
The following table sets forth certain information concerning options
granted to each of the Chief Executive Officer, President and Executive Vice
President of the Company during the fiscal year ended September 30, 1997.
OPTIONS GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
Number of Percentage of
Securities Total Options
Underlying Granted
Name Options in Fiscal Year Exercise Price Expiration Date
- ---- ---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Theodore H. Schiffman 300,000 34.4% $2.00 11/15/06
Michael Schiffman 300,000 34.4% $2.00 11/15/06
William E. Mooar 150,000 (a) 17.2% $1.62 10/14/06
</TABLE>
(a) See note (f) to Summary Compensation Table above.
- 6 -
<PAGE>
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the number
and value of securities underlying exercisable and unexercisable stock options
as of the fiscal year ended September 30, 1997 held by the Company's Chief
Executive Officer, President and Executive Vice President. No options were
exercised by the Chief Executive Officer or Executive Vice President during the
fiscal year ended September 30, 1997.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of In-the-Money
Number of Securities Securities Underlying
Underlying Unexercised Unexercised Options at
Options at September 30, 1997 September 30, 1997 (a)
----------------------------- ----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Theodore H. Schiffman 150,000 300,000 $ - $ -
Michael Schiffman 150,000 300,000 $ - $ -
William E. Mooar 37,500 112,500 $ - $ -
</TABLE>
(a) No options were in-the-money at the end of Fiscal 1997.
EMPLOYMENT AGREEMENTS
Effective October 1, 1997, the Company entered into an employment
agreement with Theodore H. Schiffman (the "THS Agreement") pursuant to which
Mr. Schiffman is employed as Chief Executive Officer of the Company through
September 30, 2000. The THS 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 THS Agreement is terminated as a result of Mr.
Schiffman's 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 THS 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
(September 30, 2000), 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 THS
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 THS Agreement and
the Company would continue to remain obligated to compensate Mr. Schiffman as
provided in the THS Agreement (including payment of death benefits), which
compensation would be reduced by any compensation received by Mr. Schiffman
from other employment.
Effective November 1, 1997, the Company entered into an employment
agreement with Michael Schiffman, employing Mr. Schiffman as Executive Vice
President of the Company through October 31, 2000 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,
2000, 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
- 7 -
<PAGE>
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, April 1, 1998, Mr. Schiffman
replaced William Mooar as President of the Company following Mr.
Mooar's resignation in April, 1998.
Effective October 14, 1996, the Company entered into an employment
agreement (as amended, the "WEM Agreement") with William Mooar, pursuant to
which Mr. Mooar served as President of the Company and performed duties for the
Company of a senior executive nature until his resignation in April, 1998.
Simultaneously, Mr. Mooar became a director of the Company. Mr. Mooar was
employed at an annual base salary of $150,000, and received a signing bonus of
$30,000 and received incentive compensation with respect to each fiscal year of
the Company ending during the term of the WEM 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 operating profit (if any) for such fiscal year and the
denominator of which will be $500,000. The WEM Agreement provided that Mr.
Mooar receive an option to purchase 150,000 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 vests 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. The WEM Agreement also provided that the
Company grant Mr. Mooar an additional option (the "Incentive Option") to
purchase an additional 250,000 shares of Common Stock if the Company's audited
pre-tax operating income for its 1997 or 1998 fiscal year is at least
$1,000,000. Effective April 1, 1998, William Mooar resigned as President of the
Company. At the time of his resignation, Mr. Mooar held vested and exercisable
options for the purchase of an aggregate of 75,000 shares of common stock of
the Company, all of which have since been exercised.
DIRECTOR'S COMPENSATION
The Company's employee directors do not receive any additional
compensation for their services as directors. Non-employee directors do not
receive a fee for serving as such, but are reimbursed for expenses. In
addition, non-employee directors are eligible to participate in the Company's
1996 Stock Incentive Plan (the "Incentive Plan").
REPORT ON REPRICING OF STOCK OPTIONS
The Company did not adjust or amend the exercise price of stock
options previously awarded to the Company's Chairman of the Board, Chief
Executive Officer, President or Executive Vice President during the fiscal year
ended September 30, 1997. As previously noted, certain stock options granted to
the Company's Chairman of the Board, Chief Executive Officer, President and
Executive Vice President during the fiscal year ended September 30, 1996, were
canceled in December 1996, contingent upon shareholder approval of the
Company's 1996 Stock Incentive Plan.
- 8 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information, as of July 1, 1998, 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
"Executive Compensation," and (iv) all directors and executive officers of the
Company, as a group (five persons).
<TABLE>
<CAPTION>
Number of Shares Percent
Identity of Beneficial Owners Of Common Stock of Class
- ----------------------------- ------------------ --------
<S> <C> <C>
Theodore H. Schiffman 482,000 shares (a)(b)(c) 9.5%
275 Hempstead Turnpike
West Hempstead, New York 11552
William E. Mooar 195,000 shares (d) 4.0%
541 Westover Road
Stamford, Connecticut 06902
Michael Schiffman 511,327 shares (b)(c) 10.1%
275 Hempstead Turnpike
West Hempstead, New York 11552
Noah Fleschner 330 shares *
275 Hempstead Turnpike
West Hempstead, New York 11552
Samson Helfgott
All directors and executive 1,242,192 shares(a)(b)(c)(d)(e) 24.3%
officers as a group
</TABLE>
(a) Includes 40,700 shares owned by Mr. Schiffman's wife, as to all of
which shares Mr. Schiffman disclaims beneficial ownership.
(b) Includes 150,000 shares subject to currently exercisable options
granted by the Company on October 12, 1994 to each of Theodore H.
Schiffman and Michael Schiffman at an exercise price of $1.50 per
share and 111,000 shares subject to currently exercisable options
granted by the Company on November 15, 1996 to each of Theodore H.
Schiffman and Michael Schiffman at an exercise price of $2.00 per
share.
(c) Theodore H. Schiffman, the Chairman of the Board and the Chief
Executive Officer of the Company, is the father of Michael Schiffman,
the 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 others.
(d) Includes 120,000 shares acquired in the 1997 Private Placement by a
self-directed retirement plan of Mr. Mooar.
(e) Includes 4,625 shares subject to currently exercisable options, in
addition to those referred to in notes (a) (b) and (d).
*Less than 1.0%.
- 9 -
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Patrusky, Mintz &
Semel as independent accountants for the fiscal year ended September 30, 1998
and to render other professional services as required. Patrusky, Mintz & Semel
served as the Company's independent accountants for the fiscal year ended
September 30, 1997. Miller, Ellin & Company served as the Company's independent
accountants for the fiscal year ended September 30, 1996 and for the interim
period through June 9, 1997.
The appointment of Patrusky, Mintz & Semel is being submitted to
shareholders for ratification.
Representatives of Patrusky, Mintz & Semel will be present at the
Annual Meeting, where they will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to
appropriate questions.
CHANGE IN CERTIFYING ACCOUNTANT
As of June 9, 1997, the Board of Directors of the Company approved the
resignation of Miller, Ellin & Company as the Company's independent accountants
and the engagement of Patrusky, Mintz & Semel as the Company's independent
accountants. The reports of Miller, Ellin & Company on the Company's financial
statements as of and for the two fiscal years ended September 30, 1995 and
September 30, 1996 did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
During the Company's two fiscal years ended September 30, 1995 and
September 30, 1996 and subsequent period through June 9, 1997 there were no
disagreements between the Company and Miller, Ellin concerning any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Miller, Ellin, & Company, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports.
The Company did not consult with Patrusky, Mintz & Semel during the
Company's two fiscal years ended September 30, 1995 and September 30, 1996 and
subsequent period through June 9, 1997 on the application of accounting
principles to a specified transaction; the type of opinion that might be
rendered on the Company's financial statements; any accounting, auditing or
financial reporting issue; or any item that was either the subject of a
disagreement or a reportable event as defined in Item 304 of Regulation S-K.
SHAREHOLDER VOTE REQUIRED
The affirmative vote of a majority of the shares of the Company's
voting Common Stock voted with respect thereto is required to ratify the
appointment of public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
PATRUSKY, MINTZ & SEMEL AS INDEPENDENT AUDITORS OF THE COMPANY, WHICH IS
DESIGNATED AS PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
- 10 -
<PAGE>
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 1999
Shareholder proposals intended to be considered for inclusion in the
proxy statement for presentation at the Company's 1999 Annual Meeting of
Shareholders must be received at the Company's offices at 275 Hempstead
Turnpike, West Hempstead, New York 11552, no later than [120 days prior to the
Company's next Annual Meeting,] for inclusion in the Company's proxy statement
and form of proxy relating to such meeting. All proposals must comply with
applicable Securities and Exchange Commission rules and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than
those set forth in this proxy statement that will be presented for action at
the meeting. If other matters properly come before the meeting, the persons
named as proxies intend to vote the shares they represent in accordance with
their best judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS SHAREHOLDERS WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, FORWARD INDUSTRIES, INC., 275 HEMPSTEAD
TURNPIKE, WEST HEMPSTEAD, NEW YORK 11552.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 2. Please mark
your votes
[X] as this
example
----------
COMMON
FOR AGAINST ABSTAIN
1. Election of Directors FOR All nominees WITHHOLD 2. Proposal to ratify Patrusky, [ ] [ ] [ ]
[ ] [ ] Mintz & Semel as
listed (except as AUTHORITY independent auditors.
marked in the to vote for all
contrary, see nominees listed
instruction below) at left
Theodore H. Schiffman, Michael
Schiffman, Samson Helfgott and Noah
Fleschner
INSTRUCTION: To withhold authority to vote for any individual nominee, draw a line
through the name of the nominee above.
The above named proxies are granted the authority, in their
discretion, to act upon such other matters as may properly
come before the meeting or any postponement or adjournment
thereof.
_______________ Dated ________________________ , 1998
|
| Signature(s) _________________________
|
| Signatures ____________________________
Please sign exactly as your name appears
and return this proxy immediately in the
enclosed stamped self-addressed envelope.
<PAGE>
FORWARD INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - AUGUST 12, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder in Forward Industries, Inc. ("Company") hereby
constitutes and appoints Theodore H. Schiffman, William Mooar and Stephen
Schiffman, and each of them, his true and lawful attorneys and proxies, with
full power of substitution in and for each of them, to vote all shares of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the offices of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 25th Floor, 551 Fifth Avenue, New York, on August 12, 1998
10:00 a.m., Eastern Standard Time, or at any postponement or adjournment
thereof, on any and all of the proposals contained in the Notice of the Annual
Meeting of Shareholders, with all the powers the undersigned would possess if
present personally at said meeting, or at any postponement or adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE APPROVAL OF
PROPOSAL 2.
(Continued and to be signed and dated on the other side)
</TABLE>
