COST of sales and EXPENSES are even more "incredible", IMO.
For a 4 person operation + 1 "part time" (according to their SEC filing), that just spent essentially nothing on R&D (see 10-Q filing, about $3K a month R&D, last qtr), they sure seem to me to have extremely high "sales, general and administrative costs"- which essentially consume nearly every dime they raise via dilution or "revenues".
Also, the cost of sales as a percentage of "revenue" was off the charts this last qtr IMO. Way out of normal proportions. Costs ate up nearly all "revenue" brought in, meaning it's not profitable or high-margin revenue.
Most recently filed 10-Q, PAGE 5:
Total revenues: $579,536
COST of sales: $523,222
Meaning, they hardly made a thing on those revenues.
$579,536 - $523,222 = $56,314. That's it. $56K is all that was left after costs.
That's about a 10% gross margin. Dismal. Barely worth selling things IMO, if all you make is 10% gross, before taxes, etc.
Expenses? Have ballooned massively upward in the past 12 months or so (think huge bonuses like $800K to just two people, consuming and off-setting essentially, the effect of any "revenues")
From most recent 10-Q filing, PAGE 33/34:
"Marketing, general and administrative expenses were approximately $1,512,706 in the three month period ended September 30, 2014, an increase of $572,352 from marketing, general and administrative expenses of approximately $940,354 in the three month period ended in September 30, 2013. The increase in marketing, general and administrative expenses is attributable, in part, to stock based compensation paid in the current period of $164,247 for services and increase in employee compensation and service providers.
33
Marketing, general and administrative expenses were approximately $3,182,397 in the nine month period ended September 30, 2014, an increase of $1,432,121 from marketing, general and administrative expenses of approximately $1,750,276 in the nine month period ended in September 30, 2013. The increase in marketing, general and administrative expenses is attributable, in part, to stock based compensation paid in the current period of $293,342 for services and increase in employee compensation and service providers."
Over $3 MILLION in "expenses" in 9 months (up from $1.7 million a yr ago, that's nearly a DOUBLE essentially, yr over yr), while spending near ZERO on "R&D" aka "trials"? Where did all that money go and to what?
Well, you now have just two "employees" receiving $525K base salary + $250K base salary + $500K "bonus" + $300K "bonus"- so that right there is = $1,575,000. Yep, over $1.5 MILLION for two people. Which explains a lot to me, where a bunch of those "expenses" are going.
$56K gross profit (revenue-cost of sales) isn't gonna off-set their other rising costs it appears to me. Not even close, the numbers just don't add up?
