WEST PALM BEACH, Fla.,
June 13, 2014 /PRNewswire/
-- Forward Industries, Inc. (NASDAQ: FORD), a designer and
distributor of custom carry and protective solutions, commented
today on the announcement by Terence
Wise, a director of Forward Industries, of his intention to
nominate himself and three other hand-picked individuals for
election as directors at the 2014 Annual Meeting of Shareholders of
the Company (the "Annual Meeting"). Mr. Wise has published his
nomination letter to the Board of Directors of the Company in which
he raises a number of purported reasons for submitting his
nomination. However, Mr. Wise's past conduct may demonstrate
his true intentions:
- To gain "creeping control" of your Company without
paying a premium.
- To perpetuate and enhance the cash flows from his
multi-million dollar related party arrangement, which he
fears the Board may terminate.
The other members of the Board, excluding Mr. Wise and his
designee Howard Morgan (the "Forward
Board"), believe Mr. Wise's action is not in the best interests of
the Company and its shareholders.
Director Wise expresses his "significant disappointment with
the Company's chronic underperformance".
- Forward Industries today is not at all a chronic
underperformer, but a profitable consumer business with over
$30 million in annual sales and
significant market share in its core diabetic market.
- Present leadership engineered a difficult operating turnaround
over the past two years that involved closing a retail division
that Director Wise himself had actively supported. After six
years of operating losses, the Company generated an operating
profit last year, due to the efforts of present leadership.
- Director Wise now curiously criticizes strategies that have
been effective and that he himself has supported as a Board
member.
Director Wise states that in his view "present leadership at
Forward lacks the necessary business acumen to implement a
directional strategy that successfully manages current assets in
order to create sales growth with sustained profitability".
- Present leadership took a business that was losing
$800K a month on average in FY12 and
restructured it into a cash flow positive business in
FY13.
- Since Chairman Frank LaGrange
Johnson's involvement in the Company began in FY10, sales in
the OEM business have grown by 63% from $19M
to $31M in FY13, and after closing down the retail division
the Company returned to profitability in FY13.
- Since stabilizing the business, CEO Robert Garrett has pursued a disciplined organic
and M&A growth strategy, with the support of the entire board,
including Director Wise.
- Mr. Johnson, a former McKinsey Consultant turned institutional
investor who has been highly acclaimed by Bloomberg, Barron's and
others, has a history of creating value for shareholders, most
recently as an activist board member with publicly traded
1-800-Contacts where he pushed for the closing of a money-losing
division and ultimate sale of the business which resulted in a 77%
increase in the price per share over an eight month period prior to
the sale for approximately $350M.
For over six months, Director Wise claims he has expressed
concern over a "number of questionable related-party
transactions involving Mr. Johnson".
- What Director Wise omits to say is that he himself is party to
a multi-million dollar related-party transaction through his wholly
owned company Forward Industries (Asia-Pacific) Corporation (the "Wise
Affiliate") that serves as the exclusive buying agent for the
Company, which works with Mr. Wise's decades-long business partner,
Jenny Yu, who owns another 5.4% of
the outstanding shares, and claims not to be acting together with
Mr. Wise.
- During a recent contract renegotiation Wise sought to double
the amount paid to the Wise Affiliate as a fee. If he had his way,
more than the entire operating profit of the Company would be paid
to himself.
Director Wise asserts that he intends to share "more
information on my plans for the Company and my strategy to unlock
substantial value for the benefit of all shareholders".
- Mr. Wise has never presented a competing vision for the Company
other than to pursue his desire to be paid more for sourcing and
receive additional representation on the Board.
- Mr. Wise and his designee Howard
Morgan have voted for every major strategic decision
proposed by the full Board.
- Mr. Wise's attempt to re-write history by claiming strategic
disagreements with the Board is truly alarming.
Finally, Director Wise contends that as the largest shareholder
of Forward, his "incentive for value creation incontrovertibly
exceeds that of the rest of the collective Board."
- We believe that Mr. Wise is attempting to take "creeping
control" of your Company without paying a premium.
- The Board questions in whose interest Mr. Wise is really
seeking "value creation." What is incontrovertible is that
Mr. Wise has been paid $2.5M in fees
since the beginning of his sourcing contract, an amount that is
over 20% greater than the current value of his investment in the
Company.
- We question whether Mr. Wise's primary motivation since he
first invested in this business has been to extract as much value
for himself and his business partner through their sourcing
entity.
- Mr. Wise has much to lose if his sourcing contract with the
Company were not renewed.
- This play for control is his most direct attempt to seize and
control this value for himself while the shareholders receive
nothing.
We have attempted to engage in a meaningful dialogue with
Director Wise in an effort to avert an expensive proxy
contest.
In an effort to avoid a proxy contest, the Forward Board has
held numerous discussions regarding Mr. Wise's concerns, and the
Nominating and Governance Committee (the "Nominating Committee")
was in the process of vetting Mr. Wise's director candidates. As
disclosed by the Company on May 28,
2014, we even amended our Bylaws to extend the nomination
deadline until June 27, 2014 in order
to provide time for the Nominating Committee to consider Mr. Wise's
nominees – one of whom was disclosed to the Company just one day
prior to Mr. Wise's hurried public nomination – and to fully
respond to him.
To our surprise, Mr. Wise demanded immediate action, and when
his arbitrary deadline was not agreed to he submitted his
nomination letter early rather than permitting the Nominating
Committee reasonable time to review his nominees.
Clearly, Mr. Wise did not commence a proxy contest "as a last
resort". The record is clear: Mr. Wise wants control of the
Board and more Forward money – shareholders' money – paid to his
Wise Affiliate.
We are committed to maximizing value for all shareholders, not
just Mr. Wise.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this
press release contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that reflect the Company's current expectations and
projections about its future results, performance, prospects and
opportunities. The Company has tried to identify these
forward-looking statements by using words such as "may," "should,"
"expect," "hope," "anticipate," "believe," "intend," "plan,"
"estimate" and similar expressions. These forward-looking
statements are based on information currently available to the
Company and are subject to a number of risks, uncertainties and
other factors that could cause its actual results, performance,
prospects or opportunities to differ materially from those
expressed in, or implied by, these forward-looking
statements. No assurance can be given that the actual results
will be consistent with the forward-looking statements.
Investors should read carefully the factors described in the "Risk
Factors" section of the Company's filings with the SEC, including
the Company's Form 10-K for the year ended September 30, 2013 for information regarding risk
factors that could affect the Company's results. Except as
otherwise required by Federal securities laws, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, changed circumstances or any other reason.
About Forward Industries
Incorporated in 1962, and headquartered West Palm Beach, Florida, Forward Industries
is a global designer and distributor of mobile device cases and
accessories. Forward's products can be viewed online at
www.forwardindustries.com.
Additional Information and Where To Find It
In connection with the proxy contest initiated by Mr. Wise, the
Company will be filing documents with the SEC, including the filing
by the Company of a Proxy Statement. Shareholders are urged
to read the Proxy Statement for the 2014 Annual Meeting of
Shareholders when it becomes available, as well as other documents
filed with the SEC, because they will contain important
information. The final Proxy Statement will be mailed to
shareholders of the Company. Shareholders may obtain free
copies of these documents (when they are available) and other
documents filed with the SEC at (www.sec.gov) or by contacting the
Company at (561) 465-0030.
Participants in the Solicitation of Proxies
The Company and its directors, executive officers and other
members of management and employees may be deemed to be
participants in the solicitation of proxies from shareholders in
connection with the Company's 2014 Annual Meeting of Shareholders.
Information concerning such participants is available in the
Company's Proxy Statement for the 2013 Annual Meeting of
Shareholders filed with the SEC on August
29, 2013. Shareholders are advised to read the Company's
Proxy Statement for the 2014 Annual Meeting of Shareholders and
other relevant documents when they become available, because they
will contain important information. You can obtain free copies
of these documents from the Company as described above.
Contact:
Forward Industries, Inc.
Robert Garrett, Jr., CEO
(212) 308-9600
SOURCE Forward Industries, Inc.