With the expiration of this exclusive contract the Company is now actively marketing this waistband to other brands and retailers. Sales orders for this product however will be significantly less than the prior year through the next several quarters, as the Company's developing shipments of the waistband products to new customers will not fully offset the decline in sales from the prior exclusive customer in the near term.
Gross margin for the three months ended March 31, 2007 was $2.7 million, or 30.2% of sales, as compared to $2.8 million, or 26.7% of sales, for the same period in 2006. “Despite the lower operating revenues our gross margins were only $100,000 less than in 2006 for the same period."
"We were able to substantially offset the revenue decline with continued improvements in our acquisition and inventory costs as compared to 2006, evidencing the effectiveness of our growth strategy and cost control efforts,” commented Mr. Forte.
Operating expenses for the three months ended March 31, 2007 were $3.4 million, compared to the same level or $3.4 million in 2006. The operating expenses in the first quarter of 2007 as compared to 2006 reflect increases in selling and marketing costs, including the cost of new sales locations, offset by reductions in legal costs, professional service fees, audit costs and other administrative costs.
For the three months ended March 31, 2006 operating expenses were also net of approximately $230,000 of bad debt recoveries from prior years.
“Our operating expenses remain under close control and scrutiny, and even though our operating expenses from year-to-year did not reflect a net reduction, we nevertheless were able to expand our operations globally, adding substantially to our sales presence within Asia, while offsetting these strategic investments with cost reductions in the U.S. in service and administrative fees,” explained Mr. Forte.
“Additionally, we continue to absorb nearly $1.0 million annually in professional service costs associated with former employees not associated with the Company's core growth strategy,” Mr. Forte added.
Cash flow from operations for the three months ended March 31, 2007 was $846,000 despite the net loss for the period, and net cash increased from December 31, 2006 by $337,000 to $3.3 million at March 31, 2007.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
