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Re: None

Thursday, 11/16/2017 7:17:26 PM

Thursday, November 16, 2017 7:17:26 PM

Post# of 20617
TF, first of all back to my initial question: Do you really think they only have 4 employees (executives) on their payroll?

If you want to compare the amount of dollars that went into making a single dollar, you should be more specific with the kind of expenses you include in your calculation.
Including all operating expenses gives a very distorted picture due to the cost of all the static baggage that goes into running an exchange listed corporation, typically in the multi-million dollars range annually even for small reporting companies.

COGS + Sales and marketing expenses have to be included and parts of the general and administrative expenses. See what all the general and administrative expenses include.

"General and administrative expense consists primarily of investor relation expense, legal, accounting, public reporting costs and other infrastructure expense related to the launch of our products. Additionally, our general and administrative expense includes professional fees, insurance premiums and general corporate expense. The increase is primarily due to the increase in merchant processing fees due to increased credit card sales volume and increased payroll and related costs due to the increase in headcount when compared to 2016.

You also want to substract non-cash depreciation and amortization expenses of $160,000 for Q3.

Even if we bluntly stick to comparing total operating expenses due to a lack of more granular insights into the company's accounts, you should acknowledge how much expenses have been reduced (while growing revenues!) compared to the same Q in 2016. In Q3 2016 $2,2 went into generating 1$ whereas in Q3 2017 $1,56 went into generating $1.
Furthermore, under normal circumstances (no SK counterfeit issue, no natural disasters) we would have landed at around $3M in revenues and making $1 would have required far less than $1,56. All this while INNV launched many new products which always incur higher sales and marketing costs in the initial phase until fully incorporated into their BH platform.

The path to profitability unfolds clearly. It is not a question of IF, but WHEN we achieve profitability. We probably won't exit 2017 profitable due to the setback in Q3 revenues, but it's just a delay primarily due to circumstances outside of the control of management.

As for further control of expenses, let me just cite a piece from the conference call:

"However, with an increase in shipping and handling cost expected from our third-party product fulfillment center due to the increase in our revenue. We have elected to move to a new facility in November 2017, which will allow us to bring our product fulfillment and inventory storage in-house. This is especially important as we geared up for the launch of FlutiCare that we announced earlier today.

We have already begun the necessary internal control and IT processes surrounding this change. We believe the implementation of this change in our operating process will reduce the cost per unit for shipping and handling of our products which in turn will increase our gross margin on our products from their current levels. We have factored in all of the increased costs such as rents, warehouse materials, and headcount and we believe we will be able to reduce our fulfillment and inventory warehouse costs on a per unit basis moving forward. With that factoring, we expect to generate an at least 30% savings on shipping and fulfillment costs for around $220,000 annually.

[...]

In addition, with the move to the new facility, we expect to bring our customer service operations in-house, which is expected to generate close to a 30% savings on customer service costs or $95,000 annually. Combined expected cost savings from the new facility overall is expected to be over $300,000 annually, which will go towards the bottom line and profitability goal."


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