SOURCE: San West

November 15, 2010 08:30 ET

San West Inc. Reports Third Quarter 2010 Results

Quarterly Revenue Increases 190.4% to $630,412 and Year-to-Date Revenue Up 324.5% to $2.3 Million

SANTEE, CA--(Marketwire - November 15, 2010) - San West, Inc. (OTCBB: SNWT), an emerging leader in the design, manufacturing, sales and repairs of off-road buggies, today reported financial results for its third quarter of 2010, the period ended September 30, 2010 and provided guidance for expected fourth quarter 2010 results.

Operational and Corporate Highlights

  • Jim Jordan, the original founder and manager of Buggy World, rejoined the Company as General Manager. Mr. Jordan, who has over 30 years of experience in the off-road industry, and has won or placed in 11 class 7 open races in Baja Mexico and 15 mini Buggy Races in Southern California, initiated a focus on driving brick and mortar sales back to 'pre-recession' $1.6 million mark and reorganizing the company employees and increasing Buggy World's sales staff with seasoned professionals.
  • 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'neil, Troy Lee Designs, Thor, Answer, Renthal, Spy and many others.
  • The Company added sales personnel to its sales force and launched several promotions for the peak off-road season, which began the weekend of October 31st and continues until the middle of May.
  • San West Inc. announced a unique series of "Off-road Yard Sale" events to liquidate certain older or discontinued inventory. The events featured free barbeque and other fan appreciation activities as off-roaders look for incredible bargains on apparel, accessories, parts and equipment to gear up for the peak off-roading season. As a result of this effort, San West liquidated obsolete or outdated inventory, with additional lower-margin sales expected in the fourth quarter, creating warehouse space for new, higher-margin inventory just in time for the "peak" off-road season.
  • San West elected prominent Bay Area businessman/marketer Vladimir Robert Cood to the board of directors and appointed him Director of Communications.
  • 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 compared to October. The conversion rate for the quarter increased 59% to the highest levels in company history.
  • The Company's YouTube channel at http://www.youtube.com/user/CountyImportsdotCom continues to grow, as total video views are closing in at 50,000 views. The Company reports 25 new subscriptions to CountyImportsdotcom channel. Thus far, 35 videos have been created and uploaded and the Company has plans for 20 additional videos by the end of 2010.

Third Quarter Financial Results

The Company reported revenues for the third quarter of $630,412, an increase of 190.4% compared to the $217,099 for the third quarter last year. Gross profit for the quarter was $29,019, or 4.6% gross profit margin, compared to gross profit of $35,695 or 16.4% gross profit margin for the third quarter of 2009. Gross margin was lower due to the beginning of a one-time liquidation of a significant amount of obsolete or dated inventory that had been warehoused for several years. The Company expects an additional impact on gross margin during the fourth quarter as additional obsolete inventory is sold at significant discounts. Gross margin from online sales through CountyImports.com remained at historically consistent levels. Total operating expenses were $304,323, down sharply on a sequential basis from the $841,930 for the second quarter and compared to $284,867 for the third quarter last year. Net loss for the quarter was $(289,285), or $(0.00) per share, compared to a net loss of $(262,184) or $(0.00) per share last year.

"We took steps during the third quarter to maximize the benefit of the peak season, including the liquidation of older inventory and a reorganization of our management team, highlighted by the return of industry icon Jim Jordan," commented Frank Drechsler, President and CEO of San West Inc. "Jim is focused on growing our brick and mortar sales while simultaneously reducing our operating expense, enabling us to grow more profitably as we continue to build on our leadership position in this emerging industry. The agreement with RND should boost traffic and create an additional revenue stream for us, and the added sales personnel should benefit us greatly during this peak season. In addition, our liquidation of older inventory has given us substantial warehouse space for newer inventory expected to arrive in the next few weeks. Our traffic in-store has been robust, and I am confident we have the team and the marketing plan in place to maximize this audience during the peak season."

Year-To-Date Financial Results

For the first nine months of 2010, the Company reported record revenues of $2.3 million, an increase of 324.5% compared to the $546,620 for the first nine months last year. Gross profit for the first nine months was $470,884, or 20.3% gross profit margin, compared to gross profit of $146,336 or 26.8% gross profit margin for the first nine months last year. Total operating expenses were $2.1 million, an increase of 202.5% compared to the $684,462 for the first nine months last year. Net loss year to date was $(1.7) million, or $(0.01) per share, compared to a net loss of $(574,577) or $(0.01) per share last year.

Outlook

For the year end December 31, 2010, management expects revenue of $2,700,000 to $3,000,000 which represents a 175 to 200% increase over last year.

"Already, November sales through the second week are up 300% from the first two weeks of October for our online properties, demonstrating that the peak season has begun," commented Jesse Gonzales, President of CountyImports.com. "These numbers indicate a 200% increase compared to November 2009 sales, reflecting 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."

Jim Jordan, General Manager of San West's "Brick and Mortar" efforts, added, "We also expect to benefit from a robust peak season, as the economy begins to improve and spending approaches pre-recession levels. We are in the process of liquidating obsolete inventory for the first time in several years, and this will provide the warehouse and showroom space to move newer, higher-margin inventory, particularly those from partners we've signed in during 2010. We look forward to sequential and year-over-year growth in our sales. Gross margins at our retail locations will be lower than historical norms due to the liquidation, but we expect the impact of this to be complete by the end of the calendar year."

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 its retail location in San Diego County, California as well as a growing Internet presence. For further information about Buggy World and its products, please visit www.buggynation.com, www.countyimports.com, www.countyimportparts.com 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.

             
             
             
San West, Inc.            
Consolidated Balance Sheets            
    September 30,     December 31,  
ASSETS   2010     2009  
CURRENT ASSETS   (Unaudited)        
Cash   $ 18,589     $ 50,659  
Accounts receivable     2,390       840  
Inventory (Note B)     133,354       287,921  
Other current assets     86,012       33,897  
  Total current assets     240,345       373,317  
                 
Fixed assets (Note C)     130,226       130,226  
Accumulated depreciation     (48,322 )     (31,974 )
  Net fixed assets     81,904       98,252  
                 
Deposits     19,474       12,599  
Goodwill (Note D)     234,100       234,100  
  Total assets   $ 575,823     $ 718,268  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
CURRENT LIABILITIES                
Accounts payable (Note E)   $ 822,528     $ 749,257  
Other current liabilities     199,008       187,689  
Floorplan notes payable (Note F)     61,353       117,962  
Convertible promissory notes (Note G)     130,000       -  
Notes payable (Note H)     89,178       510,000  
Subsidiary purchase - current portion (Note I)     26,868       32,292  
  Total current liabilities     1,328,935       1,597,200  
                 
Subsidiary purchase (Note I)     199,590       223,820  
Notes payable, non-current (Note H)     119,000       -  
Loans from shareholder (Note J)     216,950       216,950  
  Total liabilities     1,864,475       2,037,970  
                 
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 171,667,607 and 124,960,826 at September 30, 2010 and December 31, 2009, respectively.     3,824,584       2,028,648  
                 
Common stock payable     342,868       439,825  
                 
Accumulated deficit     (5,456,104 )     (3,788,175 )
  Total stockholders' deficit     (1,288,652 )     (1,319,702 )
Total liabilities and shareholder deficit   $ 575,823     $ 718,268  
                         
                         
                         
San West, Inc.            
Consolidated Statements of Operations (Unaudited)          
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
                         
Revenue   $ 630,412     $ 217,099     $ 2,320,239     $ 546,620  
Cost of goods sold     601,393       181,404       1,849,355       400,284  
Gross profit     29,019       35,695       470,884       146,336  
                                 
Expenses                                
  Selling, general and administrative     304,323       284,867       2,070,695       684,462  
    Total expenses     304,323       284,867       2,070,695       684,462  
                                 
Income (loss) from operations     (275,304 )     (249,172 )     (1,599,811 )     (538,126 )
                                 
Other income (expense)                                
  Other income     -       227       122,622       11,665  
  Other expense     -       (2,380 )     -       (15,911 )
  Amortization of beneficial conversion feature     (872 )             (150,000 )     -  
  Amortization of deferred financing costs     -               (2,601 )     -  
  Interest expense     (13,109 )     (10,859 )     (38,139 )     (32,205 )
    Total other income (expense)     (13,981 )     (13,012 )     (68,118 )     (36,451 )
Net loss   $ (289,285 )   $ (262,184 )   $ (1,667,929 )   $ (574,577 )
                                 
Net (loss) per common share basic   $ (0.00 )   $ (0.00 )   $ (0.01 )   $ (0.01 )
Weighted average shares outstanding basic     169,103,829       101,655,781       156,399,209       82,967,757  
                                 
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     17,201,629       8,049,825       14,295,412       8,085,925  

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