Forward Industries Inc. (FORD, Financial) filed Quarterly Report for the period ended 2008-12-31.
FORWARD INDUSTRIES INC. is engaged in the business of designing manufacturing and selling of custom soft-sided carrying cases and advertising specialties. Forward Industries Inc. has a market cap of $15.12 million; its shares were traded at around $1.74 with and P/S ratio of 0.76.
Sales of cases and related accessories for blood glucose monitoring kits increased $0.6 million, or 16%, to $4.1 million in the 2009 Quarter, from $3.5 million in the 2008 Quarter. These results were driven by higher sales to two of our largest customers, which increased by $1.1 million and $0.1 million, respectively, in the 2009 Quarter compared to the 2008 Quarter. The increases in sales were primarily attributable to several new in-box programs as well as higher volumes of existing in box programs. These increases were offset, in part, by declines in sales to Lifescan, our largest customer, and one other customer, of $0.5 million and $0.2 million, respectively, in the 2009 Quarter from the 2008 Quarter. We believe the decline in sales for Lifescan was due to the widespread economic weakness and customer deferrals of purchases of new blood glucose monitors.
Sales of other products declined $0.2 million to $1.2 million in the 2009 Quarter from $1.4 million in the 2008 Quarter. This decline was the result of lower sales of cell phone carry solutions in the 2009 Quarter, which decreased $0.2 million from the 2008 Quarter. Sales to one customer in this product line increased $0.1 million in the 2009 Quarter compared to the 2008 Quarter, but were offset by declines in sales to other smaller customers for these products.
Operating expenses decreased $0.4 million, or 23%, to $1.3 million in the 2009 Quarter from $1.7 million in the 2008 Quarter due primarily to a $0.3 million reduction in personnel costs as a result of the expiration at December 31, 2007, of employment agreements of two executives. Accordingly, compensation expense (including severance of $0.2 million) for these two executives was reflected in the 2008 Quarter but not the 2009 Quarter. Additionally, we incurred no royalty and commission expense in the 2009 Quarter as a result of the amendment of the Motorola license in December 2008, which eliminated all minimum royalty obligations under the current agreement, compared to $0.1 million of expense in the 2008 Quarter under the prior agreement. Lesser decreases in professional fees and other operating expenses also contributed to the improvement.
During the 2009 Quarter, we used $1.3 million of cash in operations compared to generating $1.0 million in the 2008 Quarter. Our operating cash flows in the 2009 Quarter consisted of a net loss of $0.2 million, reduced by $48 thousand for non-cash items, and $1.2 million for net changes in working capital items. Changes in accounts receivable, inventories, and prepaid and other current assets of $1.2 million, $0.4 million, and $52 thousand, respectively, contributed to the net cash used by operating activities. These were partially offset by changes in accounts payable and accrued expenses and other current liabilities of $0.5 million and $71 thousand, respectively. The change in accounts receivable is attributable to the higher sales levels in the 2009 Quarter and the timing in which these accounts receivable were originated. The change in inventories and accounts payable is in support of sales orders received and the ramping up of production in anticipation of the Chinese New Year. The change in prepaid expenses and other current assets is primarily a result of an increased amount of deposits on hand with certain newer suppliers in support of purchase orders we have placed with them.
During the 2008 Quarter, we generated $1.0 million of cash from operations consisting of a net loss of $0.3 million, increased by $0.1 million for non-cash items, and $1.2 million for net changes in working capital items, consisting primarily of changes in accounts receivable and accounts payable of $0.2 million and $1.3 million, respectively, offset, in part, by changes in inventories of $0.4 million.
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FORWARD INDUSTRIES INC. is engaged in the business of designing manufacturing and selling of custom soft-sided carrying cases and advertising specialties. Forward Industries Inc. has a market cap of $15.12 million; its shares were traded at around $1.74 with and P/S ratio of 0.76.
Highlight of Business Operations:
Net sales increased $0.4 million, or 7%, to $5.3 million in the 2009 Quarter from $5.0 million in the 2008 Quarter, due to an increase in sales of diabetic products of $0.6 million, or 16%. This increase was offset, in part, by a decline in sales of other products of $0.2 million, substantially all of which decline was in cell phone revenues. Cell phone revenues, including OEM and aftermarket sales, are now included in sales of other products. The tables below set forth sales by product line and geographic location of our customers for the periods indicated.Sales of cases and related accessories for blood glucose monitoring kits increased $0.6 million, or 16%, to $4.1 million in the 2009 Quarter, from $3.5 million in the 2008 Quarter. These results were driven by higher sales to two of our largest customers, which increased by $1.1 million and $0.1 million, respectively, in the 2009 Quarter compared to the 2008 Quarter. The increases in sales were primarily attributable to several new in-box programs as well as higher volumes of existing in box programs. These increases were offset, in part, by declines in sales to Lifescan, our largest customer, and one other customer, of $0.5 million and $0.2 million, respectively, in the 2009 Quarter from the 2008 Quarter. We believe the decline in sales for Lifescan was due to the widespread economic weakness and customer deferrals of purchases of new blood glucose monitors.
Sales of other products declined $0.2 million to $1.2 million in the 2009 Quarter from $1.4 million in the 2008 Quarter. This decline was the result of lower sales of cell phone carry solutions in the 2009 Quarter, which decreased $0.2 million from the 2008 Quarter. Sales to one customer in this product line increased $0.1 million in the 2009 Quarter compared to the 2008 Quarter, but were offset by declines in sales to other smaller customers for these products.
Operating expenses decreased $0.4 million, or 23%, to $1.3 million in the 2009 Quarter from $1.7 million in the 2008 Quarter due primarily to a $0.3 million reduction in personnel costs as a result of the expiration at December 31, 2007, of employment agreements of two executives. Accordingly, compensation expense (including severance of $0.2 million) for these two executives was reflected in the 2008 Quarter but not the 2009 Quarter. Additionally, we incurred no royalty and commission expense in the 2009 Quarter as a result of the amendment of the Motorola license in December 2008, which eliminated all minimum royalty obligations under the current agreement, compared to $0.1 million of expense in the 2008 Quarter under the prior agreement. Lesser decreases in professional fees and other operating expenses also contributed to the improvement.
During the 2009 Quarter, we used $1.3 million of cash in operations compared to generating $1.0 million in the 2008 Quarter. Our operating cash flows in the 2009 Quarter consisted of a net loss of $0.2 million, reduced by $48 thousand for non-cash items, and $1.2 million for net changes in working capital items. Changes in accounts receivable, inventories, and prepaid and other current assets of $1.2 million, $0.4 million, and $52 thousand, respectively, contributed to the net cash used by operating activities. These were partially offset by changes in accounts payable and accrued expenses and other current liabilities of $0.5 million and $71 thousand, respectively. The change in accounts receivable is attributable to the higher sales levels in the 2009 Quarter and the timing in which these accounts receivable were originated. The change in inventories and accounts payable is in support of sales orders received and the ramping up of production in anticipation of the Chinese New Year. The change in prepaid expenses and other current assets is primarily a result of an increased amount of deposits on hand with certain newer suppliers in support of purchase orders we have placed with them.
During the 2008 Quarter, we generated $1.0 million of cash from operations consisting of a net loss of $0.3 million, increased by $0.1 million for non-cash items, and $1.2 million for net changes in working capital items, consisting primarily of changes in accounts receivable and accounts payable of $0.2 million and $1.3 million, respectively, offset, in part, by changes in inventories of $0.4 million.
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