SOURCE: San West Inc

April 07, 2011 08:00 ET

San West Inc. Reports Fourth Quarter and Record Full-Year 2010 Results

Full-Year Revenue Increases 160.6% to $2.7 Million

SANTEE, CA--(Marketwire - April 7, 2011) - San West, Inc. (OTCBB: SNWT), provider of online sales of on and off-road vehicles and supplies at www.CountyImports.com and an emerging leader in sales and repairs of on and off-road vehicles, today reported financial results for its fourth quarter and full year ended December 31, 2010 and provided guidance for expected first quarter 2011 results.

Operational and Corporate Highlights

  • The Company continued to deploy strategies to improve the efficiency and effectiveness of its marketing programs for its online properties, including www.CountyImports.com. Management implemented an aggressive keyword marketing overhaul which is expected to significantly reduce online advertising costs. In addition, The Company's YouTube channel at http://www.youtube.com/user/CountyImportsdotCom continues to grow, as total video views are closing in at 120,000 views and 17,000 channel views. Thus far, 69 instructional and promotional videos have been created and uploaded.
  • As a result of these efforts, CountyImports.com and related properties benefited from an 8% increase in traffic and a 56% increase in static visit time (time spent shopping on the website) for November 2010 compared to October 2010. The conversion rate for the quarter increased 59% to the highest levels in company history. Sales thus far in the first quarter exceed sales for all of last year's first quarter by more than 10% with additional sales being tabulated.
  • San West, Inc. hired two full-time, permanent employees, both with experience in the off-road vehicle (ORV) industry and unique skills tailored to their specific areas of expertise.
  • In addition, Buggy World significantly reduced Internet advertising costs and boosted exposure to its target demographic by migrating away from traditional paid advertising mediums towards free online services such as Craigslist.com, eBay.com, and YouTube.com.
  • The Company also largely completed the successful liquidation of old inventory at Buggy World to make space for new, more popular products. These efforts have driven a drastic reduction in floor costs from between $5,000 to $6,000 per month to approximately $750 and provide more space for consignment vehicles and our higher margin repair services. Buggy World's increased focus on consignment sales is already resulting in a dramatic increase in customer traffic and is also having a very positive impact on both revenue and profitability as the store is able to capture between 10% and 20% of each sale at nearly zero cost to the company.
  • San West, Inc. formed a strategic partnership with RND, a local ATV and Dirt-Bike service and accessory retailer, under which RND will pay rent to utilize Buggy World's service area for its primary business, which is repairing and servicing ATVs and Dirt Bikes, and will also be selling soft goods, apparel and accessories in Buggy World's showroom, including products from Oakley, Fox, Shift, No Fear, O'Neill, Troy Lee Designs, Thor, Answer, Renthal, Spy and many others.
  • San West elected prominent Bay Area businessman/marketer Vladimir Robert Cood to the board of directors and appointed him Director of Communications.

Fourth Quarter Gross Profit Results

The Company reported revenues for the fourth quarter of $408,698, a decrease of 18.4% compared to the $500,553 for the fourth quarter last year. Gross profit for the quarter was $167,698, or 41.0% gross profit margin, compared to gross profit of $130,021, or 26.0% gross profit margin for the fourth quarter of 2009 with the improvement in the gross margin largely due to the change in our product mix to higher margin products in 2010 compared to 2009.

"Our efforts during the last five months of 2010 have positioned us for a strong first quarter and a record peak season," commented Frank Drechsler, President and CEO of San West Inc. "Approximately 15% of our total revenue was from the retail, brick and mortar store, and we expect to increase those sales significantly during 2011 as we target returning to pre-recession revenue levels of more than $1.5 million annually. The most important initiative involved recruiting industry icon Jim Jordan as our general manager. Jim immediately implemented a series of 'yard sales' and other programs designed to liquidate older inventory to free up floor space."

Full Year Financial Results

For the year ended December 31, 2010, the Company reported record revenues of $2,728,937, an increase of 160.6% compared to $1.0 million in revenue during 2009. Gross profit for 2010 was $638,582, or 23.4% of revenue, compared to gross profit of $257,977 or 24.6% of revenue during 2009. Total operating expenses during 2010 were $2,060,749, an increase of 49.9% compared to $1,375,186 during 2009. Net loss for the year was $(1,763,315), or $(0.00) per share, compared to a net loss of $(605,784) or $(0.01) per share last year.

Outlook

"For the first quarter ended March 31, 2011, management expects revenue of $500,000 to $520,000, or 3% - 5% higher than the first quarter of 2010, and a blended gross margin above 38%," commented Mr. Drechsler.

"Our CountyImports sales are up over the same period last year, demonstrating the importance of the improvements we have made to our websites and the marketing efforts, including our increasingly popular YouTube channel at http://www.youtube.com/user/CountyImportsdotCom."

About San West, Inc.
San West Inc. sells and services on road, off-road buggies and related after market performance products and accessories. Our products are sold both at our online store and through our growing dealer network, while our buggy repair services are performed at our store, Buggy World. Buggy with its factory-trained staff that can answer all product and service questions. Buggy World currently has one 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.

Forward-Looking Statements
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 Statements of Operations            
             
    Years Ended  
    December 31,  
    2010     2009  
          (Restated)  
                 
Revenue   $ 2,728,937     $ 1,047,174  
Cost of goods sold     2,090,355       789,197  
Gross profit     638,582       257,977  
                 
Expenses                
  Selling, general and administrative     2,060,749       1,375,186  
    Total expenses     2,060,749       1,375,186  
                 
Loss from operations     (1,422,167 )     (1,117,209 )
                 
Other income (expense)                
  Other income     164       225  
  Gain on the forgiveness of debt     13,000       625,976  
  Other expense     -       -  
  Loss on the disposal of assets     -       (65,960 )
  Amortization of beneficial conversion feature     (298,519 )     -  
  Amortization of deferred financing costs     (3,485 )     -  
  Interest expense     (52,308 )     (48,816 )
    Total other income (expense)     (341,148 )     511,425  
Net loss before income taxes   $ (1,763,315 )   $ (605,784 )
Provision for income taxes     -       -  
Net loss   $ (1,763,315 )   $ (605,784 )
                 
Net loss per common share basic   $ (0.00 )   $ (0.01 )
Weighted average shares outstanding basic     163,635,704       96,038,198  
                 
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     50,447,003       1,834,259  

 

San West, Inc.            
Consolidated Balance Sheets            
    December 31,  
ASSETS   2010     2009  
          (Restated)  
CURRENT ASSETS                
Cash   $ 11,566     $ 50,659  
Accounts receivable     5,079       840  
Inventory (Note B)     131,768       287,921  
Other current assets (Note C)     113,406       33,897  
  Total current assets     261,819       373,317  
                 
Fixed assets (Note D)     130,226       130,226  
Accumulated depreciation     (53,726 )     (31,974 )
  Net fixed assets     76,500       98,252  
                 
Deposits     19,474       12,599  
Goodwill (Note E)     234,100       234,100  
  Total assets   $ 591,893     $ 718,268  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
CURRENT LIABILITIES                
Accounts payable (Note F)   $ 891,180     $ 749,257  
Other current liabilities     235,309       187,689  
Floorplan notes payable (Note G)     4,721       117,962  
Convertible promissory notes (Note H)     194,434       -  
Notes payable (Note H)     -       510,000  
Subsidiary purchase loan-current portion (Note I)     39,176       32,292  
  Total current liabilities     1,364,820       1,597,200  
                 
Subsidiary purchase loan (Note I)     183,280       223,820  
Convertible promissory notes, non-current (Note H)     110,000       -  
Loans from shareholder (Note J)     216,950       216,950  
  Total liabilities     1,875,050       2,037,970  
                 
Commitments and contingencies                
                 
STOCKHOLDERS' DEFICIT (Note K)                
                 
Preferred stock, no par value, 10,000,000 shares authorized; 77,100 and -0- issued and outstanding at December 31, 2010 and 2009, respectively.     77,100       -  
                 
Common stock, no par value, 300,000,000 shares authorized; issued and outstanding 192,742,859 and 124,960,826 at December 31, 2010 and 2009, respectively.     1,509,570       (653,015 )
Common stock payable     -       439,825  
Accumulated deficit     (2,869,827 )     (1,106,512 )
  Total stockholders' deficit     (1,283,157 )     (1,319,702 )
Total liabilities and shareholder deficit   $ 591,893     $ 718,268  

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