Financial Performance - Consolidated net revenues for the 2025 Quarter were $6,616,000, a decrease of $536,000 or 7.5% compared to the 2024 Quarter [103]. - The OEM distribution segment generated revenues of $1,991,000, down $19,000 or 0.9% from the previous year, while the design segment saw a decline of $517,000 [112]. - Gross profit decreased to $1,501,000 in the 2025 Quarter, reflecting a gross margin of 22.7%, slightly down from 23.0% in the 2024 Quarter [103]. - The loss from continuing operations was $708,000 in the 2025 Quarter, compared to a loss of $381,000 in the 2024 Quarter, resulting in a basic and diluted loss per share of $0.64 [110]. - The company reported an accumulated deficit of $20,345,000 and a net loss of $708,000 for the three months ended December 31, 2024 [124]. Segment Performance - Revenues from diabetic products in the OEM distribution segment increased by $192,000 or 13.5% to $1,616,000, representing 81% of net revenues for the segment [114][116]. - Operating income for the OEM distribution segment improved to $223,000, with an operating income margin of 11.2%, up from 2.0% in the 2024 Quarter [119]. - The design segment experienced a decrease in net revenues, primarily due to a decline of approximately $470,000 from one customer and a net decrease in project volume, partially offset by new customer projects [120]. - Operating income for the design segment decreased, with the operating income margin dropping from 5.2% in Q4 2024 to (5.6%) in Q1 2025, driven by a decline in billable project hours and a goodwill impairment charge [121]. Expenses and Cash Flow - Sales and marketing expenses decreased by $64,000 or 17.3% to $305,000, primarily due to lower personnel costs [106]. - General and administrative expenses increased by $25,000 or 1.5% to $1,679,000, driven by higher corporate professional fees [107]. - Cash used in operating activities during Q1 2025 was $410,000, resulting from a net loss of $708,000 and various changes in working capital components [128]. - Cash used in investing activities was $5,000 in Q1 2025, down from $20,000 in Q1 2024, primarily for purchases of property and equipment [130]. - Cash used in financing activities in Q1 2024 included principal payments of $250,000 on the promissory note held by Forward China [131]. Goodwill and Future Outlook - A goodwill impairment charge of $225,000 was recorded in the 2025 Quarter due to the loss of a significant customer, which represented approximately 25.2% of consolidated net revenues in fiscal 2024 [99]. - The company expects to continue monitoring goodwill for impairment in future periods due to changes in economic and market conditions [101]. - Revenue from the largest design customer, which represented approximately 25.2% of consolidated net revenues in fiscal 2024, is expected to decline significantly starting in Q2 2025 due to the discontinuation of their insulin patch pump program [125]. - The company has substantial doubt about its ability to continue as a going concern for the next 12 months due to forecasted cash flows [125]. - The company may require additional capital for strategic acquisitions or investments, with no assurance of raising funds on acceptable terms [126]. Working Capital - As of December 31, 2024, the working capital deficit was $162,000, a decrease from a working capital of $273,000 at September 30, 2024, primarily due to lower cash and accounts receivable balances [122].
Forward Industries(FORD) - 2025 Q1 - Quarterly Report