Forward Industries Inc. (FORD, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $13.3 million; its shares were traded at around $1.69 with and P/S ratio of 0.7.
Sales of cases and related accessories for blood glucose monitoring kits decreased $1.4 million, or 30%, to $3.1 million in the 2009 Quarter, from $4.5 million in the 2008 Quarter. This decline was primarily driven by lower sales to our largest customer, which decreased by $1.4 million in the 2009 Quarter compared to the 2008 Quarter due to lower unit volumes and a lower average selling price. In addition, sales to another major diabetic product customer declined $0.2 million in the 2009 Quarter from the 2008 Quarter. These declines were offset, in part, by higher sales to our two other major diabetic product customers, which, in the aggregate, increased $0.4 million in the 2009 Quarter compared to the 2008 Quarter.
Beginning with the first fiscal quarter of 2009, we changed our presentation of sales by product line by combining cell phone product sales with other product sales as the amounts of cell phone product revenues ceased to warrant separate presentation. For purposes of the discussion below, the 2008 Period results have, for consistency of presentation with 2009 Period, been calculated retroactively to combine other products with cell phone products. Sales of other products declined $0.4 million, or 10%, to $3.3 million in the 2009 Period from $3.6 million in the 2008 Period. This decline was primarily the result of lower aftermarket sales of cell phone carry solutions in the 2009 Period, which decreased $0.2 million from the 2008 Period. Also contributing to this decline were smaller decreases in sales to several other customers of these products, which in the aggregate amounted to $0.3 million in the 2009 Period compared to the 2008 Period. These declines were offset, in part, by higher sales to one cell phone customer, which increased $0.1 million in the 2009 Period compared to the 2008 Period.
Operating expenses decreased $0.5 million, or 12%, to $3.9 million in the 2009 Period from $4.4 million in the 2008 Period due to a $0.2 million reduction in personnel costs, a $0.2 million reduction in royalty and commission expense, and a $0.1 million reduction in professional fees, as well as smaller reductions in other operating expenses. The decline in personnel expense was as a result of the expiration at December 31, 2007, of employment agreements of two executives and related severance; and the reduction in royalty expense was due to the modification of the terms of the license that expired June 30, 2009 compared to royalty expense incurred under the prior license in the 2008 Period.
During the 2009 Period, we used $0.2 million of cash in operations compared to generating $37 thousand in the 2008 Period. Our net cash used in operating activities in the 2009 Period consisted of a net loss of $1.3 million, reduced by $0.6 million for non-cash items, and changes in working capital items of $0.5 million. As to working capital items, accounts payable decreased $0.7 million, which had the effect of using cash in operating activities. This change was offset by decreases in accounts receivable, inventories, and prepaid expenses and other current assets of $0.3 million, $0.6 million, and $0.2 million, respectively. The decrease in accounts receivable is attributable to the lower sales levels in the 2009 Period and the timing in which these accounts receivable were originated. The decrease in inventories and accounts payable is primarily due to the lower level of sales in the 2009 Period and lower average unit costs of inventory purchases during the 2009 Period. The decrease in prepaid expenses and other current assets is primarily due to the timing of payments made for our insurance policies and in connection with the inception of our lease for our Hong Kong facility.
During the 2008 Period, we generated $37 thousand of cash from operations consisting of a net loss of $0.8 million, decreased by $0.4 million for non-cash items, and $0.4 million for net changes in working capital items. Working capital items included changes in accounts payable and prepaid and other current assets of $1.1 million and $0.3 million, respectively, which increased net cash provided by operating activities, whereas changes in inventory and accounts receivable of $0.8 million and $0.3 million, respectively, decreased net cash provided by operating activities.
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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 $13.3 million; its shares were traded at around $1.69 with and P/S ratio of 0.7.
Highlight of Business Operations:
Net sales decreased $1.5 million, or 26%, to $4.1 million in the 2009 Quarter from $5.6 million in the 2008 Quarter, due to lower sales of diabetic products, which declined $1.4 million, or 30%. Sales of other products declined $0.1 million, or 10%. Cell phone product revenues, which are now included in sales of other products, declined slightly and were $0.3 million in the 2009 Quarter and the 2008 Quarter. 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 decreased $1.4 million, or 30%, to $3.1 million in the 2009 Quarter, from $4.5 million in the 2008 Quarter. This decline was primarily driven by lower sales to our largest customer, which decreased by $1.4 million in the 2009 Quarter compared to the 2008 Quarter due to lower unit volumes and a lower average selling price. In addition, sales to another major diabetic product customer declined $0.2 million in the 2009 Quarter from the 2008 Quarter. These declines were offset, in part, by higher sales to our two other major diabetic product customers, which, in the aggregate, increased $0.4 million in the 2009 Quarter compared to the 2008 Quarter.
Beginning with the first fiscal quarter of 2009, we changed our presentation of sales by product line by combining cell phone product sales with other product sales as the amounts of cell phone product revenues ceased to warrant separate presentation. For purposes of the discussion below, the 2008 Period results have, for consistency of presentation with 2009 Period, been calculated retroactively to combine other products with cell phone products. Sales of other products declined $0.4 million, or 10%, to $3.3 million in the 2009 Period from $3.6 million in the 2008 Period. This decline was primarily the result of lower aftermarket sales of cell phone carry solutions in the 2009 Period, which decreased $0.2 million from the 2008 Period. Also contributing to this decline were smaller decreases in sales to several other customers of these products, which in the aggregate amounted to $0.3 million in the 2009 Period compared to the 2008 Period. These declines were offset, in part, by higher sales to one cell phone customer, which increased $0.1 million in the 2009 Period compared to the 2008 Period.
Operating expenses decreased $0.5 million, or 12%, to $3.9 million in the 2009 Period from $4.4 million in the 2008 Period due to a $0.2 million reduction in personnel costs, a $0.2 million reduction in royalty and commission expense, and a $0.1 million reduction in professional fees, as well as smaller reductions in other operating expenses. The decline in personnel expense was as a result of the expiration at December 31, 2007, of employment agreements of two executives and related severance; and the reduction in royalty expense was due to the modification of the terms of the license that expired June 30, 2009 compared to royalty expense incurred under the prior license in the 2008 Period.
During the 2009 Period, we used $0.2 million of cash in operations compared to generating $37 thousand in the 2008 Period. Our net cash used in operating activities in the 2009 Period consisted of a net loss of $1.3 million, reduced by $0.6 million for non-cash items, and changes in working capital items of $0.5 million. As to working capital items, accounts payable decreased $0.7 million, which had the effect of using cash in operating activities. This change was offset by decreases in accounts receivable, inventories, and prepaid expenses and other current assets of $0.3 million, $0.6 million, and $0.2 million, respectively. The decrease in accounts receivable is attributable to the lower sales levels in the 2009 Period and the timing in which these accounts receivable were originated. The decrease in inventories and accounts payable is primarily due to the lower level of sales in the 2009 Period and lower average unit costs of inventory purchases during the 2009 Period. The decrease in prepaid expenses and other current assets is primarily due to the timing of payments made for our insurance policies and in connection with the inception of our lease for our Hong Kong facility.
During the 2008 Period, we generated $37 thousand of cash from operations consisting of a net loss of $0.8 million, decreased by $0.4 million for non-cash items, and $0.4 million for net changes in working capital items. Working capital items included changes in accounts payable and prepaid and other current assets of $1.1 million and $0.3 million, respectively, which increased net cash provided by operating activities, whereas changes in inventory and accounts receivable of $0.8 million and $0.3 million, respectively, decreased net cash provided by operating activities.
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