0001341004-14-000574.txt : 20140701 0001341004-14-000574.hdr.sgml : 20140701 20140701132052 ACCESSION NUMBER: 0001341004-14-000574 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20140701 DATE AS OF CHANGE: 20140701 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FORWARD INDUSTRIES INC CENTRAL INDEX KEY: 0000038264 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 131950672 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45773 FILM NUMBER: 14951632 BUSINESS ADDRESS: STREET 1: 1801 GREEN ROAD STREET 2: SUITE E CITY: POMPANO BEACH STATE: FL ZIP: 33064 BUSINESS PHONE: 9544199544 MAIL ADDRESS: STREET 1: 1801 GREEN RD STREET 2: SUITE E CITY: POMPANO BEACH STATE: FL ZIP: 33064 FORMER COMPANY: FORMER CONFORMED NAME: PROGRESS HEAT SEALING CO INC DATE OF NAME CHANGE: 19721111 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Terence Bernard Wise CENTRAL INDEX KEY: 0001536431 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: BRAMBLEDOWN, 8 VALLEY WAY, CITY: GERRARDS CROSS, BUCKS. STATE: X0 ZIP: SL9 7PN BUSINESS PHONE: 914.669.5559 MAIL ADDRESS: STREET 1: BRAMBLEDOWN, 8 VALLEY WAY, CITY: GERRARDS CROSS, BUCKS. STATE: X0 ZIP: SL9 7PN SC 13D/A 1 sc13da5.htm SCHEDULE 13D, AMENDMENT NO. 5 sc13da5.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 5)*


FORWARD INDUSTRIES, INC.
(Name of Issuer)
 
Common Stock, $ 0.01 par value
(Title of Class of Securities)
 
349862300
(CUSIP Number)
 
Michael Mies, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1100
Palo Alto, CA 94301
+1 650 470 3130
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
 
July 1, 2014
(Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box.  ¨
 
Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
 
*
 
The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
 
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 
 
 

  1.
 
Name of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only)
 
 
     
 
 
            Terence Bernard Wise
 
 
  2.
 
Check the Appropriate Box if a Member of a Group
 
  
 
 
(a)  ¨
 
  
 
 
(b)  x
 
 
  3.
 
SEC Use Only
 
  
 
 
 
 
 
  4.
 
Source of Funds
 
  
     
 
 
           PF
 
 
  5.
 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
¨
     
 
 
 
 
 
  6.
 
Citizenship or Place of Organization
 
  
     
 
 
           UK
 
 
       
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
  
7.
Sole Voting Power
 
 
  
 
 
            1,608,541 shares of Common Stock
 
8.
 Shared Voting Power
 
 
  
 
 
            0
 
 9.
Sole Dispositive Power
 
 
  
 
 
            1,608,541 shares of Common Stock
 
10.
Shared Dispositive Power
 
 
  
 
 
            0
         
11.
 
Aggregate Amount Beneficially Owned by Each Reporting Person
 
 
     
 
 
           1,608,541 shares of Common Stock
 
 
12.
 
Check If the Aggregate Amount in Row (11) Excludes Certain Shares
 
¨
 
 
 
 
 
13.
 
Percent of Class Represented by Amount in Row (11)
 
  
     
 
 
          19.6% of Common Stock
 
 
14.
 
Type of Reporting Person
 
  
     
 
 
            IN
 
 
 
 
 
 
 
Item 1. Security and Issuer.
 
This Amendment No. 5 (“Amendment”) to Schedule 13D relates to the Common Stock, $.01 par value per share (the “Common Stock”), of Forward Industries, Inc. (“Forward” or the "Company"), a New York corporation. The address of the principal executive office of Forward is 477 Rosemary Avenue, Suite 219, West Palm Beach, FL 33401. The initial statement on Schedule 13D, previously filed by Terence Bernard Wise on December 15, 2011, as amended, is hereby amended and supplemented with respect to the items set forth in this Amendment.
 
Item 2. Identity and Background.
 
(a) - (c).  This statement is filed by an individual, Terence Bernard Wise (“Mr. Wise”), who resides at Flat 2, 11 Cadogan Square, London SW1X OHT, United Kingdom.  Mr. Wise is a U.K. resident and citizen and is a private businessman involved in the furniture, plastics, luggage and accessories industries.
 
(d) - (f).  Mr. Wise, who is a U.K. citizen, has not, during the past five years, been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to any civil proceeding or a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.
 
Item 3. Source and Amount of Funds or Other Consideration.

No material change.
 
Item 4. Purpose of Transaction.

On July 1, 2014, Mr. Wise delivered a letter to the Chairman of the Board, and other Board members, expressing strong condemnation of any prospective extraordinary action taken by the Board without shareholder approval prior to the contested 2014 Annual Meeting. The full text of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Mr. Wise has engaged, and intends to continue to engage, in discussions with management and the Board regarding the nomination of directors at the 2014 Annual Meeting and the composition of Forward's Board, generally, as well as ways to enhance stockholder value.

Mr. Wise does not have any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein.  Mr. Wise intends to review his investment in Forward on a continuing basis.  Depending on various factors including, without limitation, Forward’s financial position and investment strategy, changes in market prices of Forward's Common Stock and conditions in the securities markets and general economic and industry conditions, Mr. Wise may in the future take such actions with respect to his investment in Forward as he deems appropriate including, without limitation, continuing to engage in communications with management and the Board, engaging in discussions with stockholders of Forward and others about Forward and Mr. Wise’s investment, making proposals to Forward concerning changes to the capitalization, ownership structure, board structure (including board composition), corporate governance or operations of Forward,  or changing his intentions with respect to any and all matters referred to in Item 4. Mr. Wise may further purchase, hold, vote, trade, dispose or otherwise deal in the Common Stock at times, and in such manner, as he deems advisable depending on various factors including those set forth above.
 
Mr. Wise reserves the right to formulate other plans and/or make other proposals, and take such actions with respect to his investment in Forward, including any or all of the actions set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D, or acquire additional Common Stock or dispose of all or part of the Common Stock beneficially owned by him, in the public market or privately negotiated transactions.  Mr. Wise may at any time reconsider and change his plans or proposals relating to the foregoing.
 
 
 
 
 
Item 5. Interest in Securities of the Issuer.

(a) and (b) As of the date hereof, Mr. Wise beneficially owns 1,608,541 shares of Forward’s Common Stock, representing 19.62% of the issued and outstanding shares of Common Stock (based on an aggregate of 8,195,808 shares of Common Stock outstanding as reported in Forward's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2014), including 10,000 shares of common stock subject to options exercisable within 60 days of the date hereof and 15,000 shares of restricted common stock that vest on the first anniversary of the grant date, December 11, 2014.  Mr. Wise has sole voting power over all shares owned by him and sole dispositive power over all the shares owned by him other than the 15,000 shares of unvested restricted common stock over which he does not have dispositive power.
 
(c) In the 60 days prior to this filing, Mr. Wise has not acquired any of Forward's Common Stock.

(d) and (e) Not applicable.
 
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
 
No material change.
 
Item 7. Material to be Filed as Exhibits.
 
The information in Item 7 is hereby amended and supplemented as follows:
 
Exhibit 99.1
  
Letter to Chairman and Board of Forward, dated July 1, 2014.

 
 
 
 

SIGNATURE
 
After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment is true, complete and correct.

 
Date: July 1, 2014
 
  
 
 
By:
 
/s/Terence Bernard Wise
 
 
Name:
 
Terence Bernard Wise

 
 EX-99.1 2 ex99-1.htm EXHIBIT 99.1 - LETTER TO CHAIRMAN AND BOARD ex99-1.htm

Exhibit 99.1

 
July 1, 2014

Mr. Frank LaGrange Johnson, Chairman
Members of the Board of Directors
Forward Industries, Inc.
477 Rosemary Ave., Suite 219
West Palm Beach, FL 33401

Dear Fellow Members of the Board:

Last month, after more than six months of unsuccessfully petitioning Chairman Johnson and his supporters on the Board to address Forward's chronic underperformance and poor corporate governance, I was compelled to bring my concerns directly to Forward's shareholders and nominate a new slate of seven highly qualified candidates for election to the Board at the 2014 Annual Meeting.  On June 20, 2014, I issued a press release expressing my frustration with the Board's (specifically, Mr. Johnson's and his supporters') unwillingness to engage in a constructive dialogue regarding these matters and the significant destruction of shareholder value at Forward.  I believe that the Board, through its past actions, has lost credibility with shareholders and lacks the mandate to continue to serve as stewards of the shareholders' capital ahead of the 2014 Annual Meeting.  Accordingly, I am compelled to restate certain of my concerns and urge you to refrain from taking, or supporting management in taking, any actions that may further devalue our company or deprive shareholders of their right to determine the composition of the Board and the direction of their Company at the 2014 Annual Meeting.

Over the past year, a subset of the Board (from which myself and Howard Morgan have been consistently excluded) has overseen and approved a number of highly questionable transactions, in each case involving Mr. Johnson (and often other insiders). I believe these related-party transactions are highly inappropriate given the Company’s financial circumstances and demonstrate a troubling lack of independence on the Board. Some particularly egregious examples include:
 
 
·
Investment of Significant Corporate Funds with Mr. Johnson’s Company, Leading to Significant Losses. Forward has invested nearly $2 million of corporate funds with LaGrange Capital Administration LLC, of which Mr. Johnson is the managing member and entitled to advisory fees, comprised of a 1% asset-based fee and a 20% performance fee.  As a result of these activities, Forward recognized approximately $722,000 of net investment losses during fiscal year 2013.  I have come to believe that this investment strategy is an unreasonable and inappropriate use of corporate funds that benefits Mr. Johnson at the expense of Forward's shareholders.
 
 
·
Issuance of New 6% Senior Convertible Preferred Stock.   In June 2013, a special committee of the Board unilaterally designated and issued a new series of 6% senior convertible preferred stock to Mr. Johnson and eleven other investors (including another member of the Board—and former LaGrange Capital partner—Tim Gordon), with preferential dividend, governance, and liquidation rights that materially impact the rights of the Company's common stockholders. This private placement was made without any input from (or prior notice to) me or independent director Howard Morgan.  Assuming the validity of this issuance, Mr. Johnson, Mr. Gordon, and the other preferred stockholders are entitled to a 6% cumulative dividend, and have the right to demand a so-called liquidation payment (currently equal to $1,275,000) upon certain events, including a change in the composition of a majority of the Board as a result of a proxy contest (a measure clearly designed to entrench a subset of the Board, in my view).  Moreover,  the terms of the preferred stock prohibit the Company from paying dividends on its common stock without the consent of the preferred stockholders.
 
 
·
500%+ Increase in Rent Payable to Mr. Johnson's Company.  In May 2014, it came to light that Mr. Johnson was benefiting from yet another lucrative deal with the Company. In February of this year, Forward began leasing an office space for its CEO, Robert Garrett, from Mr. Johnson’s LaGrange Capital at a rate of $2,500 per month, or $30,000 per annum. As of April 1st, however, the Company agreed to increase the amount of rental charges payable to Mr. Johnson's fund to $12,700 per month, or $152,400 per annum. Putting aside the obvious question of why the Company should be paying for an expensive one-man NY office at all, given that the rest of our executive team and head office is in Florida, I find it shocking that the Company would agree to a 500% increase in rent payable to our Chairman without bringing the matter to the full Board. In my view, there is no evident reason for this increase or benefit to the Company in agreeing to it.
 
 
 
 
 
Recent events have only reinforced my firm belief that the Company is being mismanaged by its current leadership on the Board.  In response to my initial nomination of two new independent director candidates to replace Messrs. Johnson and Garrett on June 6, 2014, the Board failed to appoint a disinterested and independent committee to address my concerns about Messrs. Johnson and Garrett and consider my nominations.  Instead, a subset of the Board that is led by Mr. Johnson and includes Mr. Garrett has ignored these serious issues and sought to misrepresent my concerns about the Board as attacks on the Company.  The irony is that I am trying to protect the Company from them.  Clearly this subset of the Board lacks the independence necessary to respond to my serious concerns over Mr. Johnson's relentless self-dealing or Mr. Garrett's weak management, let alone my efforts to remove them from the Board.
 
With this troubling track record, I believe that management, with the support of Mr. Johnson and his allies on the Board, may undertake a dilutive capital raise, or other extraordinary action to disenfranchise shareholders, prior to the 2014 Annual Meeting.  In addition to any culpability for previous acts, I will consider holding any director that approves any action that has a potential to further devalue our Company personally liable.  Between now and the 2014 Annual Meeting, I insist that the Company does NOT take any of the following actions without BOTH Board and shareholder approval:

 
·
Issue additional shares of preferred stock or other equity, or engage in any transaction impacting on the Company's capital structure;
 
 
·
Burden the Company with additional financial leverage;
 
 
·
Pursue acquisitions or divestments;
 
 
·
Approve new capital expenditures or investments above $500,000; or
 
 
·
Delay the 2014 Annual Meeting.
 
Diluting existing Forward shareholders or raising capital in any form in advance of the 2014 Annual Meeting would, in my view, constitute a willful neglect of fiduciary duties to shareholders and I will hold the Company, any individuals, or companies that participate in such transaction, the Company's advisors, and any directors that approve such transaction personally accountable.
 
Forward's shareholders deserve the right to vote on the future of Forward's leadership before any decisions contribute to a further loss of value or burden the Company with additional risk.

My decision to nominate myself and six independent director candidates was carefully considered. The new director candidates that I have nominated are not my representatives, but rather fully independent director candidates that have relevant management, financial, and operational experience, including in industries directly relevant to Forward's core business. I have been Forward's largest shareholder since 2012 and have made every effort to work with the Board and management team in a constructive manner to avoid a proxy contest. During such time under Mr. Johnson's regime, my investment has suffered, along with those of my fellow shareholders. I will not tolerate further destruction of shareholder value.

I am committed to maximizing value for all Forward shareholders. My large investment in Forward reflects my belief that it is a company with great potential, with many talented long-term employees, an attractive core business, and what I believe to be underappreciated intrinsic value.  Unfortunately, however, I have lost confidence in the ability of the current Board, under the leadership of Messrs. Johnson and Garrett, to discharge their fiduciary duties to shareholders and reverse the ongoing destruction of shareholder value. An immediate reconstitution of the Board with new, highly qualified, and truly independent members is required to prevent further value destruction and ensure all future decisions place the interests of shareholders first and foremost.

 
  Sincerely,
   
  /s/ Terence Bernard Wise
   
  Terence Bernard Wise
 
 
 
 
 
ADDITIONAL INFORMATION:
 
Terence Bernard Wise, together with the other participants named herein, intends to file a preliminary proxy statement and accompanying proxy card with the Securities and Exchange Commission (the “SEC”) to be used to solicit votes for the election of his director nominees at the 2014 annual meeting of stockholders of Forward Industries, Inc. ("Forward"), a New York corporation.  

FORWARD STOCKHOLDERS ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, AS IT WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY STATEMENT AND OTHER PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO INNISFREE M&A INCORPORATED TOLL-FREE AT (888) 750-5834 (BANKS AND BROKERS MAY CALL COLLECT AT (212) 750-5833).

The Participants in the proxy solicitation are Terence Bernard Wise, Howard Morgan, Michael Luetkemeyer, Eric Freitag, Sangita Shah, N. Scott Fine and Darryl Keys (collectively, the “Participants”).

As of the date hereof, Mr. Wise beneficially owns 1,608,541 shares of the Company's common stock, constituting approximately 19.6% of the class. As of the date hereof, Mr. Morgan beneficially owns 25,000 shares of the Company's common stock.

Contact:
Innisfree M&A Incorporated
 
Scott Winter, 212-750-5833