MWW Automotive Reports Financial Results for Second Fiscal Quarter 2012
Reduces Operating Cost and Projects Increase in Revenues for Second Half of 2012
Projects Return to Profitability in 2013
HOWELL, Mich., May 21, 2012 /PRNewswire/ -- MWW Automotive Group (OTCQB: MWWC), a global automotive firm providing design and engineering services and manufacturing of accessories to many of the world's leading automotive and industrial manufacturers, issued today its financial report for the Second Fiscal Quarter 2012, ending on March 31, 2012. The full text of the Company's 10Q Report can be reviewed on the Company's web site at www.mwwautomotive.com in the investor relations section, or at the SEC website www.sec.gov.
"As expected and already earlier indicated in our shareholder conference call on January 31 2012, our first and second quarter revenues for 2012 do not yet accurately reflect our current recovery mode status," states Michael Winzkowski, Chairman of Marketing Worldwide Corp. "While our team, led by our CEO, Chuck Pinkerton has made significant progress in securing new business with some of the largest automotive and industrial firms in the country, MWW's first and second quarter revenue, somewhat limited by past cash flow constraints, is still lagging considerably behind the company's expectation for its financial performance in 2012, in spite of the new programs that have already been awarded to us. The low first and second quarter revenues have been caused mainly by the launch delay of several newly awarded programs by some of our large, new clients, especially the long expected industrial program. Nevertheless, we do expect the recovery and associated financial performance improvement to take hold during the latter part of 2012 and 2013, assuming sufficient and timely funding of current operations and start-up cost."
Chuck Pinkerton, CEO of MWW continues: "We have now begun production with several of our new automotive programs; and while production launch of our first industrial program has been further delayed, we are still expecting to finally commence with our first industrial production within the next three months. Once all awarded programs have commenced with production, we expect these new programs to provide long-lasting and consistently increasing revenues for the months and years ahead. This should also allow us to avoid further constraining debt financing and reduce share dilution going forward. Consequently, and in combination with our radical cost down exercises, we should not only improve revenues, but also return the Company to profitability. Unfortunately, the complexity of our partners' engineering and pre-production process has taken longer than initially anticipated. Consequently, this has delayed the anticipated launch dates of our new projects and distorted our first and second quarter financial results drastically. The entire MWW team is absolutely committed to making the rest of 2012 the anticipated turn-around year for MWW, despite the experienced delays. We do expect that we will improve upon our first and second quarter performance significantly beginning in the Third Quarter 2012 (ending June 2012) and the subsequent quarters ahead and to return to profitability during 2013."
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2012 TO THE THREE MONTHS ENDED
MARCH 31, 2011
Net revenues were $174,558 for the three months ended March 31, 2012. Our revenues decreased by $90,796 from the three months ended March 31, 2011. This decrease is attributable to the fact that some of the new programs that had already been awarded have been significantly delayed. The Company is expecting to begin production soon with new projects, is quoting again on numerous new paint projects and is currently being certified for new programs for the 2012, 2013 and 2014 years that are expected to provide continued revenue growth.
GROSS (LOSS) PROFIT and START UP COSTS
For the three months ended March 31, 2012, MWW's gross loss was $132,058, compared to gross loss of $39,205 for the three months ended March 31, 2011. MWW sold a greater percentage of its lower margin products in 2012 than in 2011 and had significant "start-up" costs for new projects that have not been offset by revenues yet.
OPERATING EXPENSES REDUCED
Selling, general, and administrative expenses were $363,541 in 2012 compared to $675,033 during 2011. The significant decrease in costs is attributable to management's stringent and successful efforts to reduce overhead costs. Management intends to keep costs low, so increasing product volume and revenue will result in improving profit margins and eventually net profits.
OTHER INCOME (NON CASH EXPENSES)
Financing expenses were $858,102 for the three months ended March 31, 2012 compared to $221,244 during same period last year, mainly consisting of non-cash expenses. We incurred non cash interest expense and amortization of debt discounts and non cash interest costs relating to our convertible notes of $789,367 compared to $187,101 for the three months ended March 31, 2011.
GAIN ON CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY.
For the three months ended March 31, 2012, we recorded a net gain of $2,225,672 in change of fair value of the derivative liability as compared to a loss of $166,461 for the same period the previous year. The changes in the market price of our common stock have affected the fair value of the derivative liability.
Based upon covenants in certain Securities Purchase Agreements and Convertible Promissory Notes, the Company is required to reserve shares of its common stock for potential future issuance. Accordingly, on May 1, 2012, the four persons holding majority voting power of Marketing Worldwide Corporation took action by written consent to increase the authorized capital stock of the Company to consist of Five Billion Nine Hundred Ten Million (5,910,000,000) shares of which stock Five Billion Nine Hundred Million (5,900,000,000) shares of the par value of $.00001 each shall be common stock and of which Ten Million (10,000,000) shares of the par value of $.001 each shall be preferred stock. The significant increase in the amount of authorized shares was to accommodate the requirements of the covenants in certain Securities Purchase Agreements and Convertible Promissory Notes. These shares have not been issued yet and may or may not be issued depending on the Company's financial development and the development of the Company's share price. As of May 14, 2012 the Company has 475,901,400 Outstanding Shares.
The Company's Series D stockholders, who hold majority voting power, the board and management have taking these actions based upon their informed business judgment to continue operations for the benefit of the shareholders and creditors of the Company. As the Company strives to repay its debt and secure capital to support higher revenue in future periods, it is most likely that there will be dilution to existing stockholders caused by the issuance of common stock for cash and in exchange for debt. While management seeks to minimize the dilution to existing stockholders, multiple factors beyond management's control, such as general economic conditions, the availability of and terms available for appropriate debt and equity funding, and the trading price of the Company's common stock, have a significant impact on this effort. The Company's effort to restructure its operations and to report positive cash flow and profits is expected to take 6-18 months, but depends on the factors above to be successful.
About MWW Automotive Group (MWW)
MWW's is headquartered in Howell, Michigan, with a "Class A" painting/assembly/logistics facility in Baroda, Michigan for the production of OE quality automotive and industrial products. The MWW Automotive Group (OTCQB: MWWC) delivers its in-house designed accessory products and Class A painting, assembly and logistics services directly to major global automobile manufacturers' Vehicle Processing Centers (VPC) and/or assembly lines in the United States, Canada and Europe. MWW's industrial products are delivered directly to the manufacturers for installation in their facilities. Noted for its adherence to the highest quality requirements and its advanced logistics capabilities, MWW products and services consistently meet and exceed customers' expectations and requirements. MWW provides substantial added value to the sale of vehicles and industrial products for leading international automobile and industrial manufacturers such as Toyota, BMW, Chevrolet, Hyundai, Kia Motors, GM, Ford, Deere and Whirlpool. For more information please visit www.mwwautomotive.com or e-mail firstname.lastname@example.org.
Safe Harbor Statement: Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use words such as "anticipate," "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to the Company's ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission, which are available for review at www.sec.gov under "Search for Company Filings."
SOURCE MWW Automotive Group