Record Revenue of $1.2 Million; First Quarterly Revenue in Excess of $1 Million; Second Quarter Revenue Exceeds Sales for All of 2009
SANTEE, CA–(Marketwire – August 17, 2010) – San West Inc. (OTCBB: SNWT), an emerging leader in the, sales and repairs of scooters, ATV’s and off-road buggies, today reported record financial results for its second quarter of 2010, and the six month period ended June 30, 2010 and provided guidance for expected third quarter 2010 results.
Operational and Corporate Highlights
- www.CountyImports.com was selected as the exclusive online provider of the limited edition Motobravo 150cc LKY Hornet Motorcycle Scooter. This full-sized gas-powered motorcycle/moped features a new front headlight design, upgraded custom 16 inch wheels, and 85+ miles per gallon with exceptional performance.
- The Company launched a new and enhanced customer service system for its various online properties. The new system significantly accelerates customer service functions, links consumers with updated information, and ensures that issues like missing or damaged parts are resolved in an expedited fashion.
- www.CountyImports.com launched CountyImportsdotCom’s Channel, a customized channel on YouTube (www.youtube.com), the world’s most popular online video community. CountyImportsdotCom’s Channel, which can be found at http://www.youtube.com/user/CountyImportsdotCom, features 15 videos, demonstrating scooters and CountyImports.com shipping procedures.
- Launched BuggyNation.com, an ORV portal designed from the ground up to provide a more direct method to connect a growing audience of off-road enthusiasts with the vehicles, parts, and accessories they are looking for. San West expects to add additional features and functionality to the site, including ORV blogs, forums, education, safety training, and videos.
Second Quarter Financial Results
The Company reported record revenues for the second quarter of $1.2 million, a sequential increase of 142.3% compared to $493,615 reported for the first quarter of 2010 and an increase of 697.0% compared to $150,098 for the second quarter last year. Revenue of $1.2 million for the second quarter represents the highest quarterly sales in San West’s history and the first quarter with seven-figure revenues. In addition, the $1.2 million for the quarter exceeds $1.05 million in revenues for all of 2009. Gross profit for the quarter was $306,373, or 25.6% gross profit margin, compared sequentially with $135,492 gross profit, or 27.4% gross profit margin, and compared to gross profit of $45,097 or 30.0% gross profit margin for the second quarter of 2009. Total operating expenses were $841,930, a sequential decrease compared to $924,422 for the first quarter of 2010 and an increase of 378.8%, or slightly more than half the rate revenues increased, compared to $175,859 for the second quarter last year. The sequential decrease in expense is due to streamlining the sales process, while the year-over-year increase in expense is mainly due to the recognition of $451,000 in non-cash stock-based compensation. Excluding stock compensation, SG&A was $390,930, or 122.0% higher than the second quarter of 2009. Net loss for the quarter was $(426,240), or $(0.00) per share, compared to a net loss of $(152,238) or $(0.00) per share last year. On a sequential basis, the net loss narrowed by 55.2%.
“This was a record quarter for San West, with seven figure revenue which exceeded the aggressive targets we announced last quarter by nearly 20%,” commented Frank Drechsler, President and CEO of San West Inc. “Our efforts to attract high-value natural traffic has been remarkably successful, leading to higher conversion rates, more revenue per sales, and a steady increase in repeat customers. Simultaneously, we are adding features and initiatives to build a loyal community with our customers, including our YouTube channel and our streamlined customer service project. We expect these efforts to attract and retain customers for repeat business and also anticipate improved operating margins as we scale the business. We have already guaranteed that 2010 will be a record year for San West, as Q2 revenues significantly exceeded total revenue for all of 2009 and year-to-date, our revenues are already 59.8% higher than they were all of last year.”
Year-To-Date Financial Results
For the first six months of 2010, the Company reported record revenues of $1.7 million, an increase of 413.0% compared to $329,521 for the first six months last year. Gross profit for the first six months was $441,865, or 26.1% gross profit margin, compared to gross profit of $110,641 or 33.6% gross profit margin for the first six months last year. Total operating expenses were $1.8 million, an increase of 342.0% compared to $399,595 for the first six months last year. Excluding stock compensation, SG&A was $673,197, or 68.5% higher than the first six months last year. Net loss year to date was $(1.4) million, or $(0.01) per share, compared to a net loss of $(312,393) or $(0.00) per share last year.
For the third quarter ended September 30, 2010, management expects revenue of $500,000 to $750,000 which represents a 129 to 244% increase over the same Quarter last year.
Mr. Drechsler concluded, “As we enter a historically slow time of year, after the seasonal peak of the early summer months, we remain upbeat and confident that we are on the right path. We have taken steps to diversify our revenue, benefiting from spending on scooters, buggies, other ATVs and accessories, and this diversification should help us partially offset the slower spending levels in the third quarter. We remain well positioned as a recognized leader in the ORV industry and our efforts to bolster our online properties and reduce our customer acquisition costs should help us achieve success in the future.”
About San West Inc.
San West Inc. finds its niche in the off-road arena improving designs of buggy manufactures and, selling these products and services as well as repairing of these off-road buggies and additionally providing after market performance products and accessories for buggies. Our products are sold both at our Online store and through our growing dealer network, while our buggy repair services are sold and repaired at our store, Buggy World. Buggy World is the exclusive authorized sales, service and parts distributor for San Diego County with a factory-trained staff that can answer all product and service questions. Buggy World currently has two retail locations in San Diego County, California as well as a growing Internet presence. For further information about Buggy World and its products, please visit www.buggyworld.net and http://stores.ebay.com/BuggyWorld-8770.
For further information about San West Inc. you may visit www.sanwestinc.com.
This release contains forward-looking statements, including, without limitation, statements concerning our business and possible or assumed future results of operations. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including: our ability to continue as a going concern, adverse economic changes affecting markets we serve; competition in our markets and industry segments; our timing and the profitability of entering new markets; greater than expected costs, customer acceptance of our products or difficulties related to our integration of the businesses we may acquire; and other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law. There is no assurance that a definitive agreement will be completed.
Tables to follow
|San West Inc.|
|Consolidated Balance Sheets|
|June 30,||December 31,|
|Inventory (Note B)||131,274||287,921|
|Other current assets||41,493||33,897|
|Total current assets||234,241||373,317|
|Fixed assets (Note C)||130,226||130,226|
|Net fixed assets||87,332||98,252|
|Goodwill (Note D)||234,100||234,100|
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)|
|Accounts payable (Note E)||$||704,052||$||749,257|
|Other current liabilities||176,131||187,689|
|Floorplan notes payable (Note F)||73,334||117,962|
|Convertible promissory notes (Note G)||150,000||-|
|Notes payable (Note H)||153,500||510,000|
|Subsidiary purchase-current portion (Note I)||31,750||32,292|
|Total current liabilities||1,288,767||1,597,200|
|Subsidiary purchase (Note I)||202,345||223,820|
|Notes payable, non-current (Note H)||72,000||-|
|Loans from shareholder (Note J)||216,950||216,950|
|Commitments and contingencies||-||-|
|STOCKHOLDERS’ DEFICIT (Note K)|
|Preferred stock, no par value, 10,000,000 shares authorized; none issued and outstanding||-||-|
|Common stock, no par value, 300,000,000 shares authorized; issued and outstanding 154,555,987 and 124,960,826 at June 30, 2010 and December 31, 2009, respectively.||3,629,374||2,028,648|
|Common stock payable||325,655||439,825|
|Total stockholders’ deficit||(1,211,790||)||(1,319,702||)|
|Total liabilities and shareholder deficit||$||568,272||$||718,268|
|San West Inc.|
|Consolidated Statements of Operations (Unaudited)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Cost of goods sold||889,839||105,001||1,247,962||218,880|
|Selling, general and administrative||841,930||175,859||1,766,372||399,595|
|Income (loss) from operations||(535,557||)||(130,762||)||(1,324,507||)||(288,954||)|
|Other income (expense)|
|Amortization of beneficial conversion feature||-||-||(150,000||)||-|
|Amortization of deferred financing costs||(867||)||-||(1,729||)||-|
|Total other income (expense)||109,317||(21,476||)||(54,137||)||(23,439||)|
|Net (loss) per common share basic||$||(0.00||)||$||(0.00||)||$||(0.01||)||$||(0.00||)|
|Weighted average shares outstanding basic||159,989,110||73,060,590||149,737,666||74,529,505|
|The average shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:|
|Convertible promissory notes||1,763,720||7,880,600||1,687,401||5,892,000|