Forward Industries Inc

The Reverse Split has been proposed for approval at the Special Meeting to attempt to remediate the Company’s current non-compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2) (“Minimum Price Rule”). On July 31, 2023, Nasdaq notified the Company that the Company was not compliant with this requirement by the bid price of its common stock failing to be above $1.00 per share for 30 consecutive trading days, and that it had until January 29, 2024 to regain compliance by having a closing bid price of at least $1.00 per share for 10 consecutive trading days.

On January 30, 2024, the Company received notice from Nasdaq that it had failed to regain compliance with the Minimum Price Rule. As a result, the Company’s securities are subject to delisting pending a hearing before an independent Nasdaq Hearings Panel (the “Panel”).

On February 22, 2024, the Company received notice from Nasdaq that the Company’s stockholders’ equity as reported in the Company’s Form 10-Q for the period ended December 31, 2023, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company’s stockholders’ equity be at least $2,500,000 (“SE Rule”). The stockholders’ equity of the Company was approximately $2,300,000 as of December 31, 2023.

The Company’s hearing before the Panel was held on April 9, 2024. At the hearing, the Company presented a plan of action to meet compliance with both the Minimum Price Rule and the SE Rule (our “Compliance Plan”). We can provide no assurance that the Panel will approve of our Compliance Plan to regain compliance with both the Minimum Price Rule and the SE Rule.The Board will only effectuate a Reverse Split to the extent required to meet Nasdaq listing requirements and if the Panel approves of our Compliance Plan to maintain our listing.

To effect the Reverse Split, our Board would authorize our management to file a Certificate of Amendment to our Certificate with the Secretary of State of New York. If our Board elects to implement the approved Reverse Split within the range, the number of issued and outstanding shares of our common stock (as well as common stock underlying derivative securities such as options and warrants) would be reduced in accordance with the ratio for the selected Reverse Split. The par value of our common stock would remain unchanged, however the number of authorized and unissued shares of our common stock would increase as a result of the Reverse Split. If approved by our stockholders, our Board may nonetheless elect not to implement the Reverse Split at its sole discretion. The proposed form of amendment to our Certificate to implement the Reverse Split is attached to this Proxy Statement as Annex A.

While the letters had no immediate impact on the listing of the Company’s common stock, which has continued to be listed and traded on The Nasdaq Capital Market, the Company is seeking stockholder approval of the Reverse Split to enable the Board to take action to attempt to enable the Company to regain compliance with the Minimum Price Rule and continue to be listed on The Nasdaq Capital Market. By including Board discretion to effect the Reverse Split within the range, the Company will be positioned to react to market conditions to increase the Company’s chances of achieving this goal and the Compliance plan.

The Board has determined that maintaining listing on Nasdaq is an important goal, as the Board believes that the listing of our common stock on a principal national securities exchange enhances the liquidity of the outstanding shares as well as the Company’s ability to raise capital, each of which is considered to be a benefit to the Company and its stockholders. Additionally, the Board believes that continued listing on Nasdaq enhances visibility and credibility to the investment community with respect to our common stock. If, on the other hand, our common stock were delisted from Nasdaq and we were unable to list our securities on an alternative national securities exchange, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or a lower-tiered quotation system operated by The OTC Markets Group. In such an event, investors may find it more difficult to sell shares of our common stock. The result could be a depressive effect on our stock price. In addition, if our common stock were delisted, it would become subject to SEC rules regarding “penny stocks,” which impose additional disclosure requirements on broker-dealers and further hindrances and expenses for investors seeking to sell the securities. For these reasons and others, delisting would likely adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business and an investment in us, as well as on our ability to raise capital as and when required.

While the Company hopes that approval of this Proposal 1 will, in part, enable it to regain compliance under the Compliance Plan, the Company intends to monitor the bid price of its common stock and assess its options for maintaining the listing of its common stock on The Nasdaq Capital Market.

For more information on the risks inherent in the Reverse Split, including with respect to the Nasdaq deficiency notice and potential for delisting, see below under the heading “Certain Risks Associated with the Reverse Split.” For additional information about the risks we and our investors face with respect to our common stock, business and other matters, see “Item 1A. - Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.