Forward Industries, Inc. (NASDAQ:FORD), a designer and
distributor of custom carry and protective solutions, today
announced financial results for the three and nine months ended
June 30, 2011.
Brett M. Johnson, Forward’s President and Chief Executive
Officer, commented: “We are pleased with the growth in both sales
and gross profit that we are achieving in our OEM business for the
reported periods. Most importantly, I am pleased to announce that
on a standalone basis, Forward’s OEM Division would have been
profitable in both the 2011 quarter and 2011 year-to-date period.
Our net loss in these periods directly reflects the ongoing
investments we are making in diversifying our selling channels and
expanding our product portfolio.”
Mr. Johnson continued: “In our OEM business, we have recently
been awarded several large programs by two major customers. We
anticipate that these programs will begin to contribute
meaningfully to revenues beginning in late fiscal 2012. We are
committed to growing our OEM business and we are encouraged by the
momentum we are experiencing in this channel. At the same time,
there are also headwinds in this market, as we continue to face a
very price constrained environment and are looking at increases in
supplier prices.
“Our strategy is to leverage our design, logistics, and sourcing
expertise to build a global, multi-channel (retail, corporate,
online, as well as OEM) consumer electronics accessory brand that
defines itself through leading edge technology. We believe that
there are attractive opportunities for substantial growth through
the expansion and diversification of our product lines,
distribution channels, geographies, and customer base.
“In order to execute on this strategy, we have made significant
investments in experienced sales, design, product development,
operations, and administrative personnel, which has driven our
level of operating expenses up. We will continue to invest in
resources and anticipate that the effects of these investments in
our strategy will not be fully reflected in operating expenses
until we are well into Fiscal 2012.
“As to expansion of product lines, we are working with multiple
partners to establish joint venture, licensing, or other purchase
arrangements in order to develop a broadly diversified portfolio of
intellectual property in the consumer electronics accessories
market. We intend to sell through every major sales channel and
geography and establish the Forward brand as a leader in
innovation. We look forward to updating you on our progress.”
Fiscal 2011 Third Quarter Financial Results –
Compared to Fiscal 2010 Third Quarter Results:
- Net sales increased $1.1 million, or
22%, to $6.2 million in the 2011 Quarter due to higher sales of
diabetic products, which increased $0.8 million, or 21%, and higher
sales of Other Products, which increased $0.3 million, or 22%.
- Gross profit increased $0.2 million, or
13%, to $1.4 million in the 2011 Quarter primarily due to the
increase in net sales and to a lesser extent, decreases in certain
components of costs of goods sold as a percentage of sales. These
improvements were offset, in part, by higher materials costs.
- Sales and marketing expenses increased
$0.4 million, or 71%, to $1.0 million in the 2011 Quarter primarily
due to higher personnel costs (hire of additional personnel at
higher salaries and higher sales commission expense) and related
travel and entertainment costs. To a lesser extent, higher product
development, sampling and office expenses also contributed to the
increase.
- General and administrative expenses
increased $0.6 million, or 82%, to $1.3 million in the 2011 Quarter
primarily due to higher personnel costs due to hires of finance and
operations personnel and payment of associated inducement bonuses,
and related travel and entertainment expenses. To a lesser extent,
higher telecommunications, rent and office costs also contributed
to the increase.
- Other income (expense) increased to $31
thousand of income in the 2011 Quarter from $7 thousand of expense
in the 2010 Quarter. This was due primarily to an increase in
interest income attributable to interest on a note receivable and
to a lesser extent, to foreign currency transaction gains compared
to losses in the 2010 Quarter.
- Net loss was $0.7 million, or ($0.08)
per share, in the 2011 Quarter compared to net income of $17
thousand, or $0.00 per share, in the 2010 Quarter. The net loss was
due primarily to higher operating expenses, offset in small part by
higher gross profit and other income.
Fiscal 2011 Nine-Month Period Financial Results –
Compared to the nine-month period ended June 30, 2010:
- Net sales increased $3.5 million, or
26%, to $17.1 million in the 2011 Period due to higher sales of
diabetic products, which increased $2.3 million, or 23%, and higher
sales of Other Products, which increased $1.2 million, or 35%.
- Gross profit increased $0.8 million, or
25%, to $4.0 million in the 2011 Period primarily due to the
increase in net sales, and to a lesser extent, decreases in certain
components of costs of goods sold as a percentage of sales. These
improvements were offset, in part, by higher materials costs.
- Sales and marketing expenses increased
$0.5 million, or 33%, to $2.1 million in the 2011 Period primarily
due to higher personnel costs (hire of additional personnel at
higher salaries and due to higher sales commission expense) and
related travel and entertainment expenses, and to a lesser extent,
higher office and telecommunication costs, product development
costs, and sampling and promotional costs.
- General and administrative expenses
increased $1.4 million, or 73%, to $3.3 million in the 2011 Period
primarily due to higher personnel costs, due to hires of finance
and operations personnel and payment of retention and inducement
bonuses, and related travel and entertainment expenses, in part
related to relocation of our executive offices. To a lesser extent,
higher public costs, telecommunication and office expenses, and
professional fees also contributed to the increase.
- Other income (expense) increased to $78
thousand of income in the 2011 Period from $21 thousand of expense
in the 2010 Period due primarily to foreign currency transaction
gains compared to losses in the 2010 Period and, to a lesser
extent, an increase in interest income attributable to interest on
a note receivable.
- Net loss was $1.2 million, or ($0.15)
per share, in the 2011 Period compared to a net loss of $0.3
million, or ($0.04) per share, in the 2010 Quarter. The net loss
was due primarily to higher operating expenses (primarily general
and administrative expenses), which were offset, in part, by higher
gross profit and other income.
The tables below present our Fiscal 2011 third quarter results
and are derived from the Company’s unaudited, condensed
consolidated financial statements included in its Form 10-Q filed
today with the Securities and Exchange Commission. Please refer to
the Form 10-Q for complete, interim financial statements, and more
detailed information regarding the Company’s results of operations
and financial condition relating to the three and nine-month
periods ended June 30, 2011, as well as the Company’s Form 10-K for
the fiscal year ended September 30, 2010, for additional
information.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this
news release contains forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995)
that are subject to risks and uncertainties. Actual results may
differ substantially from those expressed or implied in such
forward looking statements due to a number of factors. Such risk
factors include but are not limited to those discussed in Item 2,
Part I, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and in Part II, Item 1.A in
our Quarterly Report on Form 10-Q filed today with the SEC, as well
as in “Risk Factors” included in our Annual Report on Form 10-K for
the fiscal year ended September 30, 2010, which factors are
incorporated herein by reference.
Such risk factors include, among others: the loss of any key
customer or material sales in our Diabetic Products line, where
customer and sales concentration are high; whether important
customers reduce or discontinue inclusion of carry solutions “in
box” with their electronic products; the impact on our business and
results of operations of an acquisition or the failure to make an
acquisition; the lag in time between increased operating expenses
incurred to implement our growth strategy and the time we begin to
realize the benefits in increased revenue, if at all; the impact on
operating results of entry into one or more operating partnerships
in which the level of our support of the venture’s working capital
requirements exceeds revenues attributable to the venture; the
concentration of our accounts receivable in a small number of
customers and our ability to collect payment; the adverse impact of
customer pricing pressures on gross margins; the impact on gross
margins of higher materials and labor costs charged by suppliers;
failure of third party borrowers to repay us in full the principal
and accrued interest on notes receivable; the related steps we have
taken to fund product development or other expenses incurred by
prospective strategic partners; fluctuations in foreign currency
exchange rates that could result in increased costs or reduced
revenues; levels of demand and pricing generally for electronic
devices sold by our customers for which we supply carry solutions;
the development of quality control, delivery, or pricing issues
involving our Asian suppliers; uncertainties in the financial and
credit markets; changes in, governmental regulations; variability
in order flow from our OEM customers; a significant change in the
Company’s relationship with one or more key customers (including
changes affecting their businesses); and the loss of key sales
personnel who have significant influence on our relationships with
some of our largest customers.
About Forward Industries
Forward Industries, Inc. designs and distributes custom carrying
case solutions for hand held electronic devices. Forward’s products
can be viewed online at www.forwardindustries.com.
FORWARD INDUSTRIES, INC.
CONSOLIDATED UNAUDITED STATEMENTS OF
OPERATIONS
Three Months Ended June 30, Nine
Months Ended June 30, 2011
2010 2011
2010 Net sales $ 6,156,543 $ 5,058,392 $
17,121,017 $ 13,604,845
Cost of goods sold 4,717,260
3,787,101 13,150,934
10,415,616
Gross profit 1,439,283
1,271,291 3,970,083 3,189,229
Operating expenses: Sales and marketing
950,328 556,749 2,053,767 1,548,307 General and administrative
1,258,564 690,163 3,270,475
1,901,698
Total operating expenses
2,208,892 1,246,912 5,324,242
3,450,005
(Loss) income from
operations (769,609 ) 24,379
(1,354,159 ) (260,776 )
Other income
(expense): Interest income 33,798 6,927 69,201 35,959 Other
(expense) income, net (2,963 ) (14,306 ) 8,871
(57,363 )
Total other income (expense)
30,835 (7,379 ) 78,072 (21,404 )
Net (loss) income before taxes (738,774 ) 17,000
(1,276,087 ) (282,180 )
Benefit from income taxes
56,050 -- 56,050 --
Net (loss) income ($682,724 ) $ 17,000
$ (1,220,037 ) (282,180 )
Net (loss) income per common and
common
equivalent share
Basic and diluted ($0.08 ) $ 0.00 ($0.15 )
($0.04 )
Weighted average number of common
and
common equivalent shares
outstanding
Basic 8,087,139 7,987,285 8,087,139 7,964,070 Diluted
8,087,139 8,149,837 8,087,139
7,964,070
FORWARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, September 30, 2011
2010
Assets
(Unaudited) (Note 1) Current assets: Cash and
cash equivalents $ 15,459,220 $ 18,471,520 Accounts receivable, net
4,932,793 4,621,181 Inventories, net 1,287,553 1,036,386 Notes
receivable 1,218,269 -- Prepaid expenses and other current assets
481,485 240,651
Total current
assets 23,379,320 24,369,738 Property and equipment, net
206,846 115,205 Other assets 108,601 46,032
Total Assets $ 23,694,767 $ 24,530,975
Liabilities and
shareholders’ equity
Current liabilities: Accounts payable $ 2,850,614 $
2,439,273 Accrued expenses and other current liabilities
587,028 885,332
Total liabilities
3,437,642 3,324,605
Commitments and contingencies Shareholders’
equity:
Preferred stock, par value $0.01 per
share; 4,000,000 shares authorized;
no shares issued and outstanding
--
--
Common stock, par value $0.01 per share;
40,000,000 shares authorized,
8,794,296 and 8,761,629 shares issued;
and
8,087,886 and 8,055,219 shares
outstanding, respectively
87,943
87,616
Capital in excess of par value 16,739,607 16,469,142 Retained
earnings 4,689,632 5,909,669 Treasury stock, 706,410 shares at cost
(1,260,057 ) (1,260,057 )
Total shareholders’
equity 20,257,125 21,206,370
Total liabilities and shareholders’ equity $ 23,694,767
$ 24,530,975
Note1: Derived from audited consolidated financial
statements
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