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Gasoline futures down .52 in past 8 days. Price at the pump down .10, yes we are getting ripped off by the oil companies.
As for CAVR oil is back over $100 pb. If CAVU comes through and produces what they have stated then there is no reason why the stock will not be in the .20 range by the end of the year. As for risk/reward, IMO the RTI looks to be very very good.
As with all investments do your DD and decide based on your research, not on what some poster or group of posters say on this or any other BB.
kmikesara,JMHO but isn't it quite obvious by now that both WSU and Brucker have found nothing and will never report. Would not be surprised to hear that HEPI is now looking for another lab. One thing is for sure...give them 255K and the burn 500, give them 500K and they will burn a million. One would have thought that 255K would have been enough to add 100's of new tanks and significantly increase production. So just what happened to the 255K?
Form 10-Q for HEALTH ENHANCEMENT PRODUCTS INC
20-May-2011
Quarterly Report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
Critical Accounting Policies
The accompanying discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and all available information. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. US GAAP requires us to make estimates and judgments in several areas, including those related to recording various accruals, income taxes, the useful lives of long-lived assets, such as property and equipment and intangible assets, and potential losses from contingencies and litigation. We believe the policies discussed below are the most critical to our financial statements because they are affected significantly by management's judgments, assumptions and estimates.
Results of Operations for the three months ended March 31, 2011 and 2010.
Net Sales. Net sales for the three months ended March 31, 2011 were $32,579 as compared to $14,043 for the comparable prior period. These sales reflect principally revenues from the distribution of our ProAlgaZyme? product. The increase in our revenue for 2011 is due to our exclusive distributorship agreement with Ceptazyme, LLC to distribute our product. In the fourth quarter of 2010 we received an initial licensing fee payment of $255,000 under the terms of this exclusive distributorship agreement. We recognized $3,750 in revenue from this licensing fee during the first quarter of 2011.
Although we anticipate the realization of increasing revenues from our exclusive distributorship agreement with Ceptazyme, LLC, our ability to realize any such increased revenue is dependent upon the satisfaction of certain conditions, including the expansion of our production capacity to meet increased product demand and our product's meeting the FDA's GRAS standard or receiving New Diet Ingredient ("NDI") status form the FDA, neither of which conditions we have satisfied as of this date, though we are working on meeting the GRAS standard. In addition, we are currently working on expanding our production capacity .
However, we have encountered some difficulty in expanding our production capacity and meeting the GRAS standard, If we are unable to timely and sufficiently expand our production capacity and meet he GRAS standard (or NDI status), there will be a material adverse affect on our business, financial condition and results of operations.
Throughout 2010 and 2011, we were adversely impacted by a shortage of funds which has severely impeded our ability to market, test and expand the production of our ProAlgaZyme? product. Although we signed an exclusive distribution agreement in September of 2010, we intend to explore additional potential marketing opportunities, consistent with the limitations placed upon us by our exclusive distribution agreement with Ceptazyme, LLC. We believe that our ability to generate sales of the ProAlgaZyme? product will depend upon, among other things, expansion of our production capacity, further characterization of the product, identification of its method of action and further evidence of its efficacy, as well as advertising. The testing necessary to further characterize the product, identify its method of action and further substantiate its effectiveness is ongoing.
Cost of Sales. Cost of Sales was $39,529 for the three months ended March 31, 2011, as compared to $3,620 for the comparable prior period. Cost of Sales represents primarily costs related to raw materials, labor and the laboratory and controlled production environment necessary for the growing of the algae cultures that constitute the source of the biological activity of the ProAlgaZyme? product, and for conducting the necessary harvesting and production operations in preparing the product for sale. The increase in cost of sales for 2011 is due to an increase in overall production, combined with more efficient use of labor.
Research and Development Expenses. For the three months ended March 31, 2011, we incurred $106,911 on research and development expenses, as compared to $102,989 for the comparable period in 2010. These expenses are mainly comprised of costs associated with external research. Our research and development costs remain relatively stable as we work to complete the research begun in the first quarter of 2011. This research was initiated to further explore ProAlgaZyme?'s potential efficacy on the management of cholesterol levels. We have identified several potential bioactive compounds, but further research aimed at isolating the compound further is expected to be completed during the second half of 2011.
Selling and Marketing Expenses. Selling and marketing expenses were $5,112 for the three months ended March 31, 2011, as compared to $26,237 for the comparable prior period. The decrease in 2011 was due to the reclassification of wages paid to our Executive Vice President, combined with increased focus on research, resulting in our deemphacising marketing.
In the past we were only accustomed to nominal sales of our sole product, ProAlgaZyme. In September of 2010, we signed an exclusive distribution agreement to sell our product. This exclusive distribution agreement called for an initial licensing fee of $255,000 (received in October of 2010) and monthly orders which increase as our ability to produce product increases, subject to satisfaction of certain conditions, including satisfaction of the GRAS standard (or NDI status). An initial order of $51,100 was received in December of 2010.
Due to several delays in the design of new packaging, this order was shipped in full during the month of April, 2011. We anticipate delivering additional orders beginning towards the end of the second quarter of 2011, with monthly increases in the minimums each month as production will allow and subject to satisfaction of the FDA's GRAS standard. See Note 11 to the financial statements.
We intend to explore additional third party distribution channels for our product, consistent with the limitations placed upon us by our exclusive distribution agreement with Ceptazyme, LLC. The limit on our ability thus far to advertise our product (due in part to the need for additional testing) has had and, until we are able to advertise our product based upon the results of "class of compound" testing and identification of the bioactive ingredient, will continue to have, a material adverse effect on sales revenue and operating results. We intend to continue to pursue clinical study of our product and, subject to the results of such testing, increase advertising in 2011, subject to availability of sufficient funding, which we do not currently have.
General and Administrative Expenses. General and administrative expense was $312,663 for the three months ended March 31, 2011, as compared to $844,133 for the comparable prior period. The decrease in general and administrative expense during 2011 is due primarily to an approximate $531,000 decrease in fees paid to consultants for product and business development , of which approximately $500,000 was in the form of stock based compensation, a non-cash expense.
Liquidity and Capital Resources
The unaudited condensed consolidated financial statements contained in this Quarterly Report have been prepared on a "going concern" basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have an immediate and urgent need for additional capital. For the reasons discussed herein, there is a significant risk that we will be unable to continue as a going concern, in which case, you would suffer a total loss of your investment in our company.
As of May 11, 2011, we had a cash balance of approximately $3,000. We have had only limited revenue ($36,329 for the three months ended March 31, 2011) and have incurred significant net losses since inception, including a net loss of $467,281 for the quarter ended March 31, 2011. Subject to our expanding our production capacity to meet increased product demand (for which we do not currently have sufficient capital) and our product's meeting the FDA's GRAS standard or receiving New Diet Ingredient ("NDI") status form the FDA, the revenue guaranteed to us under the exclusive distribution agreement is expected to contribute significantly to funding our normal operations. However, we have, since inception, consistently incurred negative cash flow from operations. During the quarter ended March 31, 2011, we incurred negative cash flows from operations of $320,718. As of March 31, 2011, we had a working capital deficiency of $923,124 and a stockholders' deficiency of $1,043,755. Although we recently raised a limited amount of capital, we have an immediate and urgent need for additional capital.
During the three months ended March 31, 2011, our operating activities used $320,718 in cash, a decrease of $594,518 from the comparable prior period. The approximate $595,000 decrease in cash used by operating activities was primarily attributable to the following (all of which are approximated): a $5 million decrease in net loss, an 87,000 change (increase) in accrued payroll/ payroll taxes and an 89,000 change (increase) in accounts payable, partially offset by a $4.5 million decrease in fair value adjustment of derivative liability (a non-cash expense) and a $77,000 decrease in stocks and warrants issued for services (also a non-cash expense).
Our financing activities generated $308,910, a $819,831decrease from the comparable prior period. The decrease in cash provided by financing activities was due primarily to a decrease in proceeds from sales of securities.
Although we raised a limited amount of capital during 2010 and the first quarter of 2011, we continue to experience a shortage of capital, which is materially and adversely affecting our ability to run our business. As noted above, we have been largely dependent upon external sources for funding. We have in the past had great difficulty in raising capital from external sources. Subject to our ability to expand our production capacity (for which we do not currently have sufficient capital) and meet the FDA's GRAS standard, our exclusive distribution agreement should generate revenue to help cover at least a portion of our normal operating expenses; however we will still be reliant upon external financing for the continuation of our research program. With the leasing of our new manufacturing and office facilities, we anticipate being able to increase our production as necessary to meet the minimum requirements called for in our distribution agreement, subject to having sufficient capital, which we do not currently have.
We estimate that we will require approximately $1,500,000 in cash over the next 12 months in order to fund our normal operations. In addition, we are seeking additional funding in the range of $500,000 to $1,000,000 to fund our research initiatives. Based on this cash requirement, we have an immediate and urgent need for additional funding. Historically, we have had great difficulty raising funds from external sources; however, we recently were able to raise a limited amount of capital from outside sources.
In addition, we have only limited product liability insurance. If a product claim were successfully made against us, there could be a material adverse effect on our financial condition given our liquidity and cash limitations.
Significant elements of income or loss not arising from our continuing operations
Except as set forth below, we do not expect to experience any significant elements of income or loss other than those arising from our continuing operation. For the three months ended March 31, 2011, we recognized $4,464,607 in expense for financial statement purposes based on the change in fair value of derivative liabilities as of March 31, 2011. We may incur income or expense in future periods arising out of changes in the fair value of derivative liabilities. See the section above captioned Fair Value Adjustment of Derivative Liability for further information.
Seasonality
Our product is directed to the improvement of the health of our consumers, and we do not expect that operating results will be affected materially by seasonal factors. In addition, ProAlgaZyme? is cultivated in a climate-controlled laboratory environment, not subject to seasonal growing effects or influences
Staffing
We have conducted all of our activities since inception with a minimum level of qualified staff. We currently do not expect a significant increase in staff.
Off-Balance Sheet arrangements
We have no off-balance sheet arrangements that would create contingent or other forms of liability.
ETMM need shares...LOL
Enertec, great post. Thanks
Enertec, as I understand it it will not show up on the next short interest report because you covered, therefor there is no short. If you short 20K and leave it uncovered for a month I believe it will show up on the OTCBB short interest report. Ya like to live dangerously...give it a try...LOL
Enertec, LOL. So what price did you short it at? and, what price did you cover at? Thanks
todaybrian, Agree, there is so much going on in the market, not just the penny market, (Enron), that the general investor does not know about. Especially the actions of the MM's, here and off shore. Only thing we can go on is what's reported.
So very true!
Yes MM's play games all day long with pinky stocks but fact is the real short "INTEREST" reported on the OTCBB official site (have no idea how accurate this site is) at the end of March was only 500 shares:
http://www.otcbb.com/asp/OTCE_Short_Interest_popup.asp?Symbol=CAVR&StlmtDt=03/31/2011
And at the end of April only 400 shares:
http://www.otcbb.com/asp/OTCE_Short_Interest_popup.asp?Symbol=cavr&StlmtDt=04/29/2011
Volume today was 498,200.
Kgem, thanks, I agree share structure is very positive based on all that is happening.
100 share trade...some MM needs shares.
RBOB futures for gasoline down .40 in the last week. Gas at the pumps down 2 cents. Are we getting ripped off...yes we are.
Kgem, how does that compare to a month ago, 6 months ago, a year ago?
Thnaks
Enertec, yep I think there may be a few more who would also beat me to .015.
A 600 share trade at .03...wonder what 600 means...LOL
This is the so-called rumor of the MM's code,
-100 I need shares.
-200 I need shares badly,but do not take the stock down.
-300 Take the price down so I can load shares
-400 Keep trading it sideways.
-500 Gap the stock. This gap can be either up or down, depending on the direction of the 500 signal.
That would be wonderful and I would buy another several million shares.
Just what do you think caused the stock to go from a penny to .07??? As far as I can see they have not diluted the stock at all. They simply state that "We believe that by reducing the long and short term debt along raising new project capital with minimal dilution should increase investor interest in CAVU's stock," stated William Robinson." Please note they have not said WE HAVE reduced......therefor they have NOT diluted the stock as of this point.
Then if you made money you have no complaints.
But if you bought it at a penny you are still making 200% RTI in a couple of months. Lets assume you bought a million shares at a penny. 10,000 investment. You now sell 333,000 at .03 $10,000 income. What you have now is 666,000 free shares. Nice work if you can get it, and it appears some did. Good for them.
short interest for CAVR reported April 29 is 400 shares! As I have been saying all along no-one is shrting this stock. This is the officail OTC web site reporting short interest twice a month.
http://otcbb.com/asp/OTCE_Short_Interest_popup.asp?Symbol=cavr&StlmtDt=04/29/2011
WallStreet,
Please tell us how putting out a PR dilutes the stock.
A stock is diluted when the company issues more shares. Maybe I missed it but I did not see that the company has issued any stock recently.
If you mean that the recent PR's did nothing to prop up the price of the stock, then that would be correct. Since the recent PR's the stock has decreased in value. This is not dilution this is a drop in price.
Bucks and noone seems to know which of these rules and regulations applies to MM's of pink stocks? They are a bunch of crooks anyhow and don't really adhere to any of the SEC regulations. It's just easier to catch them on the NY and NAS stock exchanges than it is on the Pinky's.
Hi Amigo
IMHO $25 a bottle is a good start towards getting the price down to where it needs to be for the masses to jump in.
Willy
pxquiter, there is certainly some discussion about MM's shorting and then settling at the end of the day and short interest. Short interest (shares that are actually shorted) is currently 7500 shares as reported on the OTCBB official web site. The next report will be on the 15th.
And one trade later it gaped up to .03 on 10,000 shares. Could be something to that MM thing.
Oil futures down from 114pb to 99pb since May 1st. Gasoline futures down .34 in the last 2 days. If it stays there for a few days should be reflected at the pump. We should see at least .20 drop in gas prices. But then how much money do the oil companies make?
NITE had a buyer all morning for 200K @.030, buyer must have changed his order to market or .033 since NTIE now only has 5000 showing at .027. As the MM article showed they do play games.
Enertec, kinda what I figured since there is no daily reporting of short interest. Anyone could make the analysis that today's early action looked like shorts but who in their right mind would short a 3 cent stock? I continue to believe that the selling is by a few who have sub penny stock and just want to nail down some profits. Could be wrong about that. Will find out on the 16th what the short interest is. As of April 30 it was only 7500 shares.
Analysis of pink sheet stocks.
1) Brokers cannot recommend them in fact most brokerage houses will not let their brokers recommend any stock (NYSE or NASDAQ) that is less than 4 to 5 bucks.
2) I don't know of any funds that hold Pink sheet stocks.
3) Don't know of any Banks that hold PS stocks.
4) Don't know of any large investors that buy or hold PS stocks.
Then who owns these stocks? Insiders...those who started the companies or bought the shells, their friends and relatives, for the most part. That coupled with the pie-in-the-sky penny investors who want to turn 2 or 3K into 20 or 30K and the investment web sites that were paid stock or cash to promote the stock.
A very very few Pinkies ever make it.
Then there is another type of investor that may put a small chunk of their portfolio in a pinky now and then, that is when we can't get to Vegas.
One has to realize that 1 million shares of CAVR @.03 is only 30K. One small trade for many real stocks on the NY or NAS.
So, given the fact that no funds, banks or large investors are in the pinks the only thing that drives them up or down are the MM's (and they are a bunch of crooks) and the small investor.
You roll the dice and take your chances. I think, if everything one reads about CAVR is true, then this company certainly has a chance to be one of the ones that make it.
Sorry of the Book...Willy
Enertec, don't know how your broker knows that 1/3 are short sales since short interest is only reported twice a month. Please ask him where he gets the info that 1/3 of the sales today were shorts. Thanks.
pxquitar, it's penny land.
Hi Amigo,
As I understand it HEPI has NOT moved yet and still has lots of short bottles in the warehouse. Maybe you can confirm that they have, in fact, already moved.
Yes alternate channels.
pxguitar, shot covering drives a stock up, not down. There are only 7500 shares of CAVR short (as of the 30th of April since short interest is only reported twice a month 15th and 30th). Yesterdays action was primarily selling by who and why is anyone's guess but, as I posted yesterday, there are a lot of penny shares out there and .04 is a 300 percent gain. I bought more this morning.
Liquid,
As I told Amigo I received a case today and they were all the old short PAZ bottle and PAZ label. 2nd bottle in your picture.
Willy
Amigo,
I just received a case. Same PAZ small bottle and still no swamp taste.
Vipyr, 4 days ago you were adding chunks of stock. It's penny world they go up and down fast. If you believe all the write-up, the PR's and investor sentiment here on this board, then it's a long term play. Use dips to buy more. If the write-ups are fabricated and the PR's are a bunch of BS then investors will lose their butts.
Vipyr, just put in order for 50,000 at .043...got it immediately.
Kgem, we were both posting at the same time and kinda echoed each others sentiments. Great minds think alike..LOL, thanks for your post as well.
jaws123, what you're missing is the fact that this stock was a penny for nine months. Around the first week of March word was getting out. 3 or 4 million shares traded still under a penny and then the real pump started. See graph.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=cavr&insttype=&freq=1&show=&time=6
This does not appear to be a pump and dump in the classical sense but PR's, investor chat, and a stock promotion web site certainly drove the stock up 600 percent, and on some reasonable volume. There may be a few who got in during the 9 months, or even the first and second weeks of March, who, seeing that the stock has stalled, are willing to take their 200-300 per cent RTI.
I believe that you will find that most here on this board are in it for the long haul however there are some penny stock traders who just look for a double or triple and then move on.
If the company performs as the PR's indicate (and the PR's are accurate...there are a lot of penny stock frauds out there) then the stock will climb.
JMHO as current investor with a significant position.