Revenue and Profitability - Revenues for the 2024 Quarter were $7,152,000, a decrease of 26.7% compared to $9,753,000 in the 2023 Quarter[105]. - Gross profit for the 2024 Quarter was $1,643,000, down 16.4% from $1,966,000 in the 2023 Quarter, while gross margin increased from 20.2% to 23.0%[105][108]. - The OEM distribution segment's revenues fell to $2,010,000, a decline of 54.1% from $4,377,000 in the 2023 Quarter, primarily due to lower sales volume from diabetic customers[114][115]. - Revenues from diabetic products in the OEM distribution segment decreased by 64.3%, from $3,985,000 in the 2023 Quarter to $1,424,000 in the 2024 Quarter[116][118]. - Operating loss for the 2024 Quarter was $380,000, compared to a loss of $128,000 in the 2023 Quarter, representing a 196.9% increase in losses[105][112]. Expenses and Cost Management - Sales and marketing expenses decreased by 10.2% to $369,000 in the 2024 Quarter, while as a percentage of revenues, they increased from 4.2% to 5.2%[105][109]. - The design segment's operating income margin decreased from 8.1% in the 2023 Quarter to 5.2% in the 2024 Quarter due to lower utilization rates and higher direct labor costs[125]. - The company has reduced its sourcing fee with Forward China from $100,000 to $65,833 per month effective October 2023[123]. Liquidity and Financial Position - As of December 31, 2023, the working capital deficit was $949,000, a decrease from $26,000 at September 30, 2023, primarily due to the inclusion of an $850,000 promissory note in current liabilities[126]. - Cash on hand as of January 31, 2024, was approximately $3,200,000, with an additional $1,300,000 available under a line of credit maturing on May 31, 2024[126]. - The company anticipates that liquidity and financial resources will be adequate for the next 12 months, but may require additional capital for strategic acquisitions or investments[128]. - The company does not foresee the need for significant capital asset purchases but may need to acquire equipment in the future[129]. Cash Flow Activities - Cash provided by operating activities during the 2024 Quarter was $116,000, resulting from an increase in accounts payable of $522,000 and a decrease in accounts receivable of $445,000[130]. - Cash used in operating activities during the 2023 Quarter was $149,000, driven by a net loss of $430,000 and an increase in accounts receivable of $994,000[131]. - Cash used in investing activities was $20,000 in the 2024 Quarter and $45,000 in the 2023 Quarter, primarily for purchases of property and equipment[132]. - Cash used in financing activities was $250,000 in the 2024 Quarter and $50,000 in the 2023 Quarter, consisting of principal payments on the promissory note held by Forward China[133]. Accounts Payable and Future Considerations - Accounts payable due to Forward China was approximately $8,894,000 as of December 31, 2023, with an agreement to limit collections to $500,000 in any 12-month period[127]. - The company faces uncertainty regarding the extension of the FC Note and additional payment terms from Forward China[127]. - The company expects to liquidate remaining retail inventory by June 30, 2024, following the strategic exit from the retail distribution segment[100].
Forward Industries(FORD) - 2024 Q1 - Quarterly Report