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Form 10-Q for ATRINSIC, INC.
11-May-2015
Quarterly Report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
Historical Background
We were originally incorporated under the name Millbrook Acquisition Corp., on or about February 3, 1994. In May 2007, we changed our name to New Motion, Inc. In February 2008, we merged with Traffix, Inc., pursuant to which Traffix, Inc. became a wholly-owned subsidiary of ours. In June 2009, we changed our name to Atrinsic, Inc. Prior to our bankruptcy filing in 2012, we were a marketer of direct-to-consumer subscription products and an Internet search-marketing agency. We sold entertainment and lifestyle subscription products directly to consumers, which we marketed through the Internet. We also sold Internet marketing services to our corporate and advertising clients. However, by early 2012, we had suspended all operation of these businesses. In addition, until March 30, 2012, we were a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and filed periodic reports with the Securities and Exchange Commission ("SEC"). On March 30, 2012, we filed a Form 15 with the SEC, terminating our obligation to file periodic reports under Sections 13 and 15(d) of the Exchange Act.
On June 15, 2012, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code and terminated all remaining employees. Since then we have been managed by several outside legal and financial professionals. In June 2013, the United States Bankruptcy Court, Southern District of New York confirmed our Plan of Reorganization (the "Plan of Reorganization") subject to our acquisition of a 51% controlling equity interest in Momspot, which was completed on July 12, 2013. Pursuant to the terms of a Membership Interest Purchase Agreement, we acquired a 51% equity interest in Momspot in exchange for our commitment to contribute up to $165,000 of working capital to Momspot over a two-year period to fund its business development and operations. Simultaneous with the acquisition, we became a party to the Momspot Operating Agreement and the manager thereunder. Momspot is a development stage company whose goal is to be the premier specialty retail affiliate marketing company targeting women between the ages of 24 and 45 who are either mothers or expecting their first child. Momspot currently constitutes our only business operation.
Pursuant to the Plan of Reorganization, all outstanding debt was converted to equity with the secured creditors receiving 4,600,000,000 shares, $0.000001 par value per share, of our Series A Convertible Preferred Stock, general unsecured creditors receiving an aggregate of 300,000,000 shares of our Common Stock, par value $0.000001 per share ("Common Stock"), and pre-bankruptcy petition common stockholders having their pre-bankruptcy shares exchanged for an aggregate of 100,000,000 shares of Common Stock.
Results of Operations
Factors Affecting Comparability
We adopted fresh start accounting and reporting effective July 12, 2013 (the "Fresh Start Reporting Date"). The financial statements as of the Fresh Start Reporting Date report the results of the Successor Company with no beginning retained earnings or accumulated deficit. Any financial statement presentation of the Successor Company represents the financial position and results of operations of a new reporting entity and is not comparable to prior periods presented by the Predecessor Company. The financial statements for periods ended prior to the Fresh Start Reporting Date do not include the effect of any changes in the Predecessor Company's capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. Accordingly, the financial statements on or prior to July 12, 2013 are not comparable with the financial statements for periods after July 12, 2013. Operating activities between July 1, 2013 and July 11, 2013 were insignificant.
Three months ended March 31, 2015 compared to the three months ended March 31, 2014 (dollars in thousands)
During the three months ended March 31, 2015, we incurred a loss from operations of approximately $121 as compared to $398 for three months ended March 31, 2014. The decrease in loss from operations can be primarily attributed to a decrease of $275 in employee stock-based compensation expenses related to the options granted in February 2014, and a decrease of $8 in research and development expenses related to web design and development. During the three months ended March 31, 2015, we recorded approximately $7 of net loss attributable to non-controlling interest as compared to $11 for three months ended March 31, 2014.
Nine months ended March 31, 2015 compared to the period from July 12, 2013 to March 31, 2014 (dollars in thousands)
During the nine months ended March 31, 2015, we incurred a loss from operations of approximately $377 as compared to $845 for the period from July 12, 2013 to March 31, 2014. The decrease in loss from operations can be primarily attributed to a decrease of $145 in professional expenses related to legal services, consulting services and accounting services, and a decrease of $29 in research and development expenses related to web design and development. During the period from July 12, 2013 to March 31, 2014, we recorded $204 of reorganization expenses related to a post confirmation liquidation plan. During the nine months ended March 31, 2015, we recorded approximately $20 of net loss attributable to non-controlling interest as compared to $35 for the period from July 12, 2013 to March 31, 2014.
Liquidity and Going Concern (dollars in thousands)
We continually project anticipated cash requirements, which may include business combinations, capital expenditures, and working capital requirements. As of June 30, 2014, we had cash of approximately $101 and working capital of approximately $104. As of March 31, 2015, we had cash of approximately $57 and working capital deficit of approximately $456.
Our existing liquidity is not sufficient to fund our operations, anticipated capital expenditures and working capital for the foreseeable future. Absent generation of sufficient revenue from the execution of our business plan, we will need to obtain additional debt or equity financing.
Operating activities used $283 and $703 in cash for the nine months ended March 31, 2015 and the period from July 12, 2013 to March 31, 2014, respectively. The sources of cash from operating activities during the nine months ended March 31, 2015, primarily comprised of $364 net loss and a $34 decrease of accounts payable, which included payments to legal and accounting professionals, payments to consultants to develop our website, insurance, and other administrative expenses, and offset by a $55 increase of prepaid insurance expenses.
Investing activities used $1 and $1 in cash for the nine months ended March 31, 2015 and the period from July 12, 2013 to March 31, 2014, respectively.
Our financing activities provided cash of $240 for the nine months ended March 31, 2015. On August 15, 2014, we raised gross proceeds, in a debt financing transaction, of $90 from our two principal stockholders, and issued secured promissory notes in the principal amount of $45 to each of them. On December 18, 2014, we raised gross proceeds, in a debt financing transaction, of $150 from our two principal stockholders, and issued secured promissory notes in the principal amount of $75 to each of them. The notes are secured by all of our assets.
Our financial statements for the nine months ended March 31, 2015 indicate there is substantial doubt about our ability to continue as a going concern as we are dependent on our ability to obtain short-term financing and ultimately to generate sufficient cash flow to meet our obligations on a timely basis in order to attain profitability, as well as successfully obtain financing on favorable terms to fund our long-term plans. We need to raise additional capital to cover our operating and capital expenditures. If the capital raising efforts are not successful, we might not be able to continue as a going concern.
Flying up
Chesapeake Energy Corporation (CHK) reported first quarter non-GAAP EPS of $0.11 before the opening bell Wednesday, compared to the consensus estimate of $0.04. Revenues decreased 45.3% from last year to $2.76 billion. Analysts expected revenues of $3.45 billion. Q1/15 net income was a loss of $3.74 billion, or ($5.72) per share, which compares to net income of $374 million, or $0.54 per share in the 2014 first quarter.
Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “Chesapeake is meeting the challenge of low commodity prices head-on and delivered a very strong first quarter. Adjusted for asset sales, our production in the 2015 first quarter grew by 14% compared to the 2014 first quarter. Our cash costs remain at industry-low levels and we expect our assets to continue delivering greater efficiencies even as we reduce our activity levels throughout 2015.”
Profitability-wise, the natural gas Oklahoma City-based company has a t-12 profit and operating margin of 9.15% and 17.11%, respectively. The $10.52 billion market cap company reported $2.90 billion in cash vs. $20 billion in total liabilities in its most recent quarter.
CHK currently prints a one year loss of about 40% and a year-to-date loss of around 18%.
The stock is currently up $0.34 to $16.20 on 240K shares.
http://wallstreetpit.com/108186-notable-earnings-3d-systems-ddd-chesapeake-energy-chk/
Chesapeake shows 300% beat on earnings!
Good report on Zacks today.
but it does mean that we are poised for fantastic growth I love it ??
Westinghouse Solar Inc.
04/30/2015 | Press release
Andalay Solar Letter to Shareholders From Its CEO
distributed by noodls on 04/30/2015 22:17
0 0 0
SAN JOSE, Calif., April 30, 2015 /PRNewswire/ -- Andalay Solar (OTCQB: WEST), a leading supplier of integrated solar power systems, is announcing that it will publish the following Letter to Shareholders from its CEO regarding its key recent business objectives and recent feedback that it has received from shareholders as related to its proposed proxy for its shareholders meeting dated June 9, 2015. A copy of this letter has been filed today with the SEC on Schedule 14A as additional definitive proxy materials concurrent with the definitive proxy statement.
Dear Andalay Shareholders:
I've now been at Andalay for a year and I wanted to take this opportunity to review some of the achievements and challenges that we have faced over the last twelve months or so, and address feedback that we have heard about from you since the filing of our preliminary proxy last week.
I have been in the solar industry for nearly 10 years. I started in the industry with Suntech Power, where I managed global sales which included putting in place the team and strategy to grow North American sales from 25MWs in 2006 to 500MWs in 2011. My relationship with Andalay dates back to 2007 when Suntech agreed to become the largest OEM producer of Andalay compatible modules. Suntech also entered into a license agreement to sell the Andalay product outside of the United States.
I have always been impressed with the Company's technology, which truly reduced installation time, reduced the complex number of parts in a system and the integrated wire management system improved long term reliability. However, I was never a big fan of a small company like Andalay being a manufacturer and selling a full solar kit (module, inverter and mounting hardware) as I felt it was very capital intensive, hard to be "bankable" and hard to avoid low revenues and low margins. I came to Andalay because I believed that it had a very strong product with great unrealized potential to be broadly adopted within the residential solar markets across the United States with annualized unit sales growing from the hundreds to the thousands.
This is particularly the case with the lack of any comparable competitors with a similarly comprehensively designed rail-less system with over 8 years of installed track record, especially as Zep Solar was acquired and Andalay has a broad suite of patents covering its core plug-and-play technology. As a business model, I felt that it was critical to quickly migrate the company to a new, sustainable and viable business strategy that provided large economies of scale to facilitate rapid and profitable growth. The principle building blocks for this new strategy included:
signing up Tier One module companies to license the Andalay technology;
signing up Top 20 residential installers and distributors as customers;
becoming bankable among the key banks and solar leasing companies;
focusing sales on principally selling the Company's proprietary mounting hardware as opposed to a full solar kit, which both reduces working capital strain as well as increases gross margins to enable the Company to rapidly scale sustainable and accretive revenue and eventually profits; and
resolving the historical debt and raising new financing to fund the working capital necessary to enable the company to dramatically grow its revenues, margins and profits.
During this year, against many odds, we made notable achievements among the top four building blocks listed above, including entering a licensing MOU with Hyundai and a Tier One Chinese module company, having Hyundai produce and ship Andalay compatible modules to be ready for sale as of May 15, commencing the process of onboarding several top tier solar installers and distributors and having the combined Hyundai-Andalay solution be on the approved vendor list of multiple solar lease and financing companies.
In order to grow rapidly to realize the full potential of the new business model, we need to work with financial advisors to raise capital and settle past debts. We need to have a stronger balance sheet to have the financial strength to drive our business forward with marquis customers and partners, which would lead eventually to the main goal, which is rapid growth with sustained profitability. The proposals contained in the proxy contain some of the critical items needed to achieve this goal.
Therefore, I would like to take the opportunity to explain more about why we put forth the following proxy agenda items:
Increase the authorized number of shares of common stock to 2.5 billion.
We are currently close to the limit of our authorized/outstanding shares of common stock, and in order to attract new strategic or financial investors we will need to make them partners in the Company - and that would mean issuing shares of common stock for an investment in the Company. We felt this proposed amount of shares would avoid the need to revisit this issue for many years.
Provide our Board of Directors with the authority to implement a 1-for-50 reverse stock split.
The reverse stock split proposal was not intended to be effected right away and was drafted as an option for the future to provide the Board with future flexibility, including to recapitalize the company's share structure and potentially relist the company's shares onto a stock exchange.
Revise the terms of our 2006 Stock Incentive Plan to increase the number of shares available under the Plan, and also to extend the plan.
In order to attract and retain top tier motivated employees, we need to be able to compensate those employees in a competitive environment. In the San Francisco Bay Area, employment is very high and many companies can offer much better cash compensation than we can. Therefore it is very important to be able to offer our employees equity compensation in addition to their cash compensation. The proposal keeps the amount of shares available under the Plan to the same percentage as it is currently (i.e. up to 10% of the total outstanding shares).
The current Stock Incentive Plan had been set to expire in 2016. It is important to extend this Plan beyond 2016 to achieve its purposes as a long term incentive and retention program for key employees.
Upon issuance of the preliminary proxy, we did hear from various of our investors who expressed concern with:
our plan to increase our authorized number of shares of common stock to 2.5 billion; and
our plan to provide our Board of Directors with the authority to implement a 1-for-50 reverse stock split
As I've discussed above, it is critical to the short-term and long-term viability of the Company for Andalay Solar to increase the number of authorized shares. The total recommended increase to 2.5 billion shares was carefully considered to give the Company headroom over the next 5 years. In light of investor feedback, however, I propose that a smaller number of authorized shares would be sufficient to meet our projected needs over the next two years based on our current projections. Therefore I requested and our Board has agreed to reduce by 50% the new proposed number of authorized shares to 1.25 billion. I hope that shareholders will feel more comfortable with this new proposal designed to address our near term needs. I want to emphasize it is critical for our future growth to have this proposal as we need to bring in the additional capital to make our new business model successful.
I also recognize that the reverse stock split proposal is more targeted at a long-term view, and it is not something that is needed to achieve our core goals in the near term. As such, to simplify the proxy voting, the Board has agreed to remove the proposal.
The definitive proxy will not contain the 1-for-50 reverse split proposal and we will no longer be asking our stockholders to vote on this issue at this time. We will also adjust the proposed number of shares for the Stock Incentive from 250 million shares to 125 million shares which equates to 10% of the proposed total authorized number of shares.
Over the past year I have continued to evaluate our technology, I have spoken with many potential licensees and potential distribution partners, and am going into my second year as CEO and President fully confident on our potential to be a leading supplier of rackless PV solutions to the solar industry. That doesn't mean that the course we have chartered will be easy or smooth sailing, and certainly every potential transaction takes more time than I am happy with, but it does mean that we are poised for fantastic growth. I will host a call in the upcoming weeks to elaborate on our future plans and outlook.
In order to achieve the success which I think we are able to achieve, I would appreciate shareholder support on the important matters in the proxy statement and for you to vote for management's recommendations. Please vote YES to all items.
Sincerely,
Steven Chan
Chief Executive Officer
About Andalay Solar: (OTCQB:WEST)
Founded in 2001, the Company is a designer and manufacturer of integrated solar power systems. The Company has been a pioneer in the concept of integrating the racking, wiring and grounding directly into a solar panel. The company's AC solar panel reduces the number of components for a rooftop solar installation by approximately 80% and lowers labor costs by approximately 50%. This AC panel, which won the 2009 Popular Mechanics Breakthrough Award, has become the industry's most widely installed AC solar panel. The Company currently sells its new generation "Instant Connect®" products in both AC-ready and DC format which provide the best combination of safety, performance and reliability. For more information on the Company, visit www.andalaysolar.com.
Forward-Looking and Cautionary Statements - Safe Harbor
Statements made in this letter that are not historical in nature, including those related to market acceptance of products, constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "expects," "projects," "plans," "will," "may," "can," "anticipates," believes," "should," "intends," "estimates," and other words of similar meaning. The statements are subject to risks and uncertainties that cannot be predicted or quantified, and our actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks associated with Andalay's products long term reliability, the ability of Andalay to execute its long term goals, the increase in annual sales, potentiality of large investors in the Company, and the growth potential of the Company. All forward-looking statements included in this release are made as of the date of this letter, and Andalay Solar assumes no obligation to update any such forward-looking statements.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/andalay-solar-letter-to-shareholders-from-its-ceo-300075668.html
SOURCE Andalay Solar, Inc.
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Just nice
NICE This is truly a milestone for Andalay to have Hyundai, one of the world's preeminent corporations with over $49 billion in annual sales, commence manufacturing and shipment of solar modules featuring Andalay technology," commented Andalay Solar's President & CEO, Steven Chan . "We are extremely excited about our partnership with Hyundai and we expect these modules will be snapped up quickly by solar installers in the U.S. eager to try out the new modules with our mounting hardware."
http://finance.yahoo.com/news/andalay-solar-announces-may-15-130000419.html
Div this week/earnings next week.
Can you provide some kind of proof of what you said?
[bAndalay Solar Achieves Class A Fire Rating in Accordance With UL1703/UL2703 for Type 1 Modules on Steep Slope Roof]
SAN JOSE, Calif., April 27, 2015 /PRNewswire/ -- Andalay Solar (WEST), a leading supplier of solar power modules, integrated racking solutions, and services today announced its Andalay Mounting System successfully passed the Class A fire test in accordance with UL1703/UL2703 for Type 1 modules. The fire rating test was conducted on a steep slope roof with the worst case scenario of a 5" air gap, and without the need of a skirt nor any additional modification.
"We are pleased to have successfully passed the Class A fire rating test for the worst case scenario which is a 5" air gap. This means an installer can raise or lower the array without impacting the fire classification," said Steven Chan, President and CEO of Andalay Solar. "Passing the highest level fire rating adds to Andalay Solar's reputation as the most simple and robust integrated solution in the market."
Effective January 1, 2015, jurisdictions in California have started to implement new fire classification requirements for photovoltaic systems based on the California Building Code and IBC 2012. By successfully passing the Class A fire test and receiving the ETL mark issued by Intertek, Andalay Mounting Systems paired with Type 1 modules (such as the new Hyundai/Andalay solar module) are compliant for use on California steep slope roofs under the new heightened level of fire requirements. The ETL certifications will also be valid outside California as more jurisdictions around America adopt similar PV system fire standards in 2016 and beyond.
Andalay Solar products can be found at Amazon.com, Lowes.com, and www.andalaysolar.com.
About Andalay Solar: (WEST)
Founded in 2001, the Company is a designer and manufacturer of integrated solar power systems. The Company has been a pioneer in the concept of integrating the racking, wiring and grounding directly into a solar panel. The company's AC solar panel reduces the number of components for a rooftop solar installation by approximately 80% and lowers labor costs by approximately 50%. This AC panel, which won the 2009 Popular Mechanics Breakthrough Award, has become the industry's most widely installed AC solar panel. The Company currently sells its new generation of "Instant Connect®" products in both AC and DC format which provide the best combination of installation speed, performance and reliability. For more information on the Company, visit www.andalaysolar.com.
Forward-Looking and Cautionary Statements - Safe Harbor
Statements made in this release that are not historical in nature, including those related to market acceptance of products, constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "expects," "projects," "plans," "will," "may," "can," "anticipates," believes," "should," "intends," "estimates," and other words of similar meaning. The statements are subject to risks and uncertainties that cannot be predicted or quantified, and our actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks associated with potentially different rating standards in the future, the ability to raise or lower the array without impacting the fire classification, and the reduction of components and labor costs associated with installation of Andalay panels. All forward-looking statements included in this release are made as of the date of this press release, and Andalay Solar assumes no obligation to update any such forward-looking statements.
http://finance.yahoo.com/news/andalay-solar-achieves-class-fire-130000856.html
Chesapeake Energy Corp. CHK has an Earnings ESP of +100.00% and a Zacks Rank #3.
BP plc (BP) Poised for Strong Q1 Earnings: What to Expect? - Analyst Blog
Zacks By Zacks Equity Research 2 hours ago
New York Drivers Hit With A Big Surprise
Provide Savings Sponsor
?
Oil giant BP plc BP is expected to report first-quarter 2015 earnings on Apr 28, before the opening bell.
The company’s earnings history is a mixed bag. BP has beaten the Zacks Consensus Estimate in two of the trailing four quarters while missing the same in the other two. In the last reported quarter, the company delivered a negative earnings surprise of 9.76%. Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that BP is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +25.00%. This is because the Most Accurate estimate stands at 30 cents, whereas the Zacks Consensus Estimate is pegged lower at 24 cents. This is a meaningful and leading indicator of a likely positive earnings surprise for this company.
Zacks Rank: BP carries a Zacks Rank #3 (Hold).The stocks with Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of BP’s Zacks Rank #3 and +25.00% ESP make us confident of an earnings beat this season.
What Will Drive the Better-than-Expected Earnings?
During the fourth quarter, BP’s earnings in Downstream rose substantially to $1,213 million from $70 million in the year-ago quarter. The improvement came on the back of a stronger refining environment as well as higher contribution from supply and trading activities. This is expected to continue through 2015.
BP’s upstream margins are likely to be driven by its four main upstream profit centers – Angola, Azerbaijan, the North Sea and the GoM. In 2015, BP expects to bring quite a few projects online. These projects are likely to increase the company’s margins going forward. For 2015, the company expects refining margins to improve from the 2014 level due to turnaround activity, which in turn will be reflected in the first-quarter earnings.
BP expects first-quarter 2015 production to be higher than fourth-quarter 2014, mainly reflecting increased entitlements on the basis of assumed lower oil prices. Increased production is expected to translate into higher income and hence earnings beat.
Moreover, the company’s strategy of offloading its non-core upstream properties while creating a portfolio with potentially stronger growth from a smaller base is likely to prove beneficial during the first quarter.
Stocks to Consider
Here are some companies from the same space which, according to our model, have the right combination of elements to post an earnings beat this quarter:
Marathon Petroleum Corp. MPC has an Earnings ESP of +1.77% and a Zacks Rank #1 (Strong Buy).
Spectra Energy Partners LP SEP has an Earnings ESP of +2.53% and a Zacks Rank #3.
Chesapeake Energy Corp. CHK has an Earnings ESP of +100.00% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BP PLC (BP): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
SPECTRA EGY PTR (SEP): Free Stock Analysis Report
MARATHON PETROL (MPC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Patience patience
NICE Morningstar Assigns “BB+” Credit Rating to Chesapeake Energy (CHK) http://www.dakotafinancialnews.com/morningstar-assigns-bb-credit-rating-to-chesapeake-energy-chk/125712/
[bThe funding will support the development of a drug targeting a specific immune cell, called T-cells, that lie within tumors. The therapy seeks to identify these cells by looking for a specific protein that is more pronounced in T-cells contained within tumors, and then activate these cells to stimulate the body’s own fight against the cancer.]
WHO SAID WE DO NOT HAVE FUNDING? mmunity-based cancer drug prompts $56M investment for Jounce.
http://www.bizjournals.com/boston/blog/health-care/2015/04/immunity-based-cancer-drug-prompts-56m-investment.html
http://ir.andalaysolar.com/secfiling.cfm?filingid=1347452-15-23&CIK=1347452
We believe investors in King Digital (NYSE: KING), Zynga (NASDAQ: ZNGA), Gluu Mobile (NASDAQ: GLUU) et al. would find owning MOKO a good way to diversify in the niche mobile app space by owning a Company with a unique and de-risked business model. We expect that as quarterly earnings come into focus, MOKO will guide on user growth and traction for the first time since reporting year-end 2014 numbers, which were related to soft-launches of key products, for instance REC*IT.
Any traction towards the 10-15 Million MAUs by YE2015 could create a catalyst for shares to breakout. As MOKO gains visibility with U.S. investors, we anticipate the Company will trend towards its intrinsic value.
A $65M Company Just Announced A Deal Potentially Worth $100M and No One Noticed
Friday,April 17,2015
Moko Social Media (NASDAQ: MOKO) is one of the best ways to capture upside in the social media & mobile app space, in our view. It's also one of the only pure-play companies trading at a discount to what an acquirer would potentially pay for the Company and its impressive suite of rapidly-growing mobile apps. Most importantly, MOKO just signed a deal potentially worth $100 Million+, tapping into one of the hottest and most-desired demographics among advertisers - and no one noticed.
Earlier this month we found that acquirers were paying $20 - $150 per monthly active user to acquire hot, and rapidly-growing social media companies. MOKO has proven to have incredible retention and virality with a suite of mobile apps designed around existing but underserved social communities.
We believe an arbitrage opportunity exists between fair value and what MOKO is currently valued at, as a result of the Company's origins in Australia and limited sponsorship in the U.S markets. Conversely, the Company's NASDAQ listing finally gives U.S. investors an opportunity to own a small, pure-play name in social media apps (eg. non-gaming) and capture the upside in this exciting sector.
THE $100 MILLION NEWS THAT NO ONE IS PAYING ATTENTION TO
Last week, MOKO entered into a Memorandum of Understanding (MOU) for an exclusive partnership with [US-based] BigTeams. This marks entry of MOKO’s REC*IT platform into the high school sports market in a big way – BigTeams has ~15% market share across >4000 high schools. The US National Center for Education Statistics estimates enrollment of 16 Million students in grades 9 – 12 in 2015, which implies MOKO will have the ability to potentially capture 2.4 Million teenagers through this partnership with BigTeams (and onwards from there). Our due diligence shows acquirers have valued each monthly active user (MAU) at $20 - $150 (as shown, below).
The weighted average of the acquisitions illustrated (above) is $41.40 per MAU. This implies that the BigTeams deal could be worth upwards of $100 Million to MOKO (potential MAUs * $41.40).
If you recall, Facebook’s (NASDAQ: FB) early virality began with exclusivity - you needed a college email address to join the social network. Exclusivity has worked well for MOKO in a pilot launch of REC*IT among college students interested in intramural and extracurricular sports & activities and is likely to prove popular among their younger counterparts for the same reasons: (i) REC*IT has exclusive feeds of data and content required to power the apps and (ii) the app is exclusive to each college/social group.
REC*IT’s early traction with college students is shown, below.
Source: Company Reports
We believe that MOKO is likely to quickly monetize REC*IT with advertisers targeting the teenager demographic thanks to growth in the ‘Athleisure’ market.
REC*IT COULD POTENTIALLY BECOME AN ‘ATHLEISURE’ ADVERTISING HOT SPOT
Athleisure is one of the hottest trends in the fashion industry that the teenager demographic has amply embraced. It refers to clothing and shoes related to performance gear and sportswear outfits worn for athletic purposes and leisure activities alike. According to Piper Jaffray’s Spring 2015 Taking Stock With Teens - a semi-annual survey that studies the behavior of teenagers in regards to spending, social network activity, preferred brands, household economic data and other variables - teenagers are accountable for $75 billion of discretionary spending. The survey suggests that athletic-leisure, preppy, leggings and jogging pants are the top teen fashion trends. By category, clothing and shoes represent 20% and 8% of total spending, respectively.
Nike (NYSE: NKE) is considerably immersed in the Athleisure movement and was designated as the top preferred clothing and shoe brand by teenagers. Companies like Under Armour, Inc. (NYSE: UA) and lululemon athletica (NASDAQ: LULU) are specifically oriented towards the Athleisure movement and could be considered pure plays in the fashion trend.
Since REC*IT already stands as a social network that is specific to sports and recreation specifically, companies that produce Athleisure-related products can find in REC*IT a vertical in which their main consumer group exclusively exists. REC*IT provides companies like Nike, Under Armour and lululemon, an opportunity to promote their products directly to their intended audience. If traction among high school student users mirrors what we’ve seen so far with the college user base, REC*IT could offer one of the top mobile advertising portals in the U.S. for the demographic.
5 REASONS TO OWN MOKO NOW
In our view there are 5 reasons investors should consider owning MOKO right now.
Unique & Proven Business Model
i. Subscription-based, premium and freemium business models are the norm. MOKO offers its social networking apps to users at no charge and monetizes the assets through premium advertisers eager to reach a highly-targeted and engaged user base.
ii. MOKO has proven across numerous verticals – politics, college sports, college social network, running enthusiasts – that users are highly engaged on their platform and use it out of necessity, not boredom. This is reflected in impressive retention numbers among new and existing users (eg. REC*IT)
Barriers to entry for Competitors & Scalability
i. Exclusivity agreement with data providers create near-insurmountable barriers to entry for competitors. Being the only app for access to recreational sports schedules at your school, for example, helps to rapidly penetrate the total addressable user base and, importantly, keep it.
ii. MOKO has entered in exclusivity agreements across several large social groups, for instance progressive politics, which has shown considerable growth. At last count Blue Nation Review had 3.5M MAUs and could be expected to continue growing with the 2016 U.S. elections looming.
Valued At Discount To Intrinsic Value
i. The best way we can compute what MOKO is intrinsically worth is to ask ourselves what an acquirer would potentially pay to own 100% of the Company.
ii. Research shows acquirers will pay ~$40 per MAU - on the lower end - to own a fast-growing social media company.
iii. At year-end 2014, MOKO had 5 Million MAUs. This would imply, at $40/MAU, an intrinsic value of $200 Million versus MOKO’s enterprise value of just $65 Million, or >200% in potential upside. This does not factor in the expected 10-15 Million MAUs management has targeted for year-end 2015.
Near-Term Profitability
i. MOKO has built an enviable user-base and erected huge barriers to entry for competitors with rather limited resources.
ii. Cost management and fixed overhead suggest top-line growth will almost immediately accrete to bottom-line results.
iii. Management has indicated profitability is a top priority and we believe this could become reality in the next 12 months.
Management Team with Track-Record of Value Creation, Now Building MOKO
i. MOKO is led by impeccable management and directors with track-records for value creation
ii. 75+ years of cumulative senior management/executive experience in Fortune 500 firms, creating, running or overseeing marketing/advertising and financial operations
iii. Directors with extensive experience building and overseeing firms with $100M+ in annual revenues and involvement in successful M&A exits
iv. Management has a meaningful equity stake in MOKO and is therefore incentivized to build shareholder value
We believe investors in King Digital (NYSE: KING), Zynga (NASDAQ: ZNGA), Gluu Mobile (NASDAQ: GLUU) et al. would find owning MOKO a good way to diversify in the niche mobile app space by owning a Company with a unique and de-risked business model. We expect that as quarterly earnings come into focus, MOKO will guide on user growth and traction for the first time since reporting year-end 2014 numbers, which were related to soft-launches of key products, for instance REC*IT.
Any traction towards the 10-15 Million MAUs by YE2015 could create a catalyst for shares to breakout. As MOKO gains visibility with U.S. investors, we anticipate the Company will trend towards its intrinsic value.
About One Equity Research
One Equity Research is a leading provider of proprietary and in-depth research crafted by respected financial analysts and domain experts. Our team includes trained finance professionals with diverse backgrounds in equity research, investment banking, and strategic consulting at preeminent firms. We distribute our research through mainstream media partners and to subscribers of our Intelligence Service. To learn more please visit http://www.oneequityresearch.com/
PATIENCE IS A VIRTUE
Financier of Aubrey McClendon Settles Lawsuit With Chesapeake Energy Corporation (NYSE:CHK) http://wallstreetpr.com/financier-of-aubrey-mcclendon-settles-lawsuit-with-chesapeake-energy-corporation-nysechk-34688
YES,YES,YES,YES
We generate revenue from the sale and installation of solar power systems. For the year ended December 31, 2014, we generated $1.3 million of revenue, an increase of $164,000, or 14.6%, compared to $1.1 million of revenue for the year ended December 31, 2013. The increase in revenue was due to an increase in watts sold, partially offset by a decrease in our average selling price per watt.
Net revenue $ 1,288,985 100.0 $ 1,124,836 100.0
Form 10-K for ANDALAY SOLAR, INC.
15-Apr-2015
Annual Report
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion highlights what we believe are the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our financial statements and related notes appearing elsewhere in this Annual Report. This discussion contains "forward-looking statements," which can be identified by the use of words such as "expects," "plans," "will," "may," "anticipates," "believes," "should," "intends," "estimates" and other words of similar meaning. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these forward-looking statements. Such risks and uncertainties include, without limitation, the risks described on page 1 of this Annual Report, and the risks described in Item 1A above.
Company Overview
We are a designer and manufacturer of integrated solar power systems and solar panels with integrated microinverters (which we call AC solar panels). We design, market and sell these solar power systems to solar installers and do-it-yourself customers in the United States, Canada, the Caribbean and South America through distribution partnerships, our dealer network and retail outlets. Our products are designed for use in solar power systems for residential and commercial rooftop customers. Prior to September 2010, we were also in the solar power installation business, but decided to exit that business. Recently we have re-entered the solar power installation business.
In September 2007, we introduced our "plug and play" solar panel technology (under the brand name "Andalay"), which we believe significantly reduces the installation time and costs, and provides superior reliability and aesthetics, when compared to other solar panel mounting products and technology. Our panel technology offers the following features: (i) mounts closer to the roof with less space in between panels; (ii) no unsightly racks underneath or beside panels; (iii) built-in wiring connections; (iv) approximately 70% fewer roof-assembled parts and approximately 50% less roof-top labor required; (v) approximately 25% fewer roof attachment points; (vi) complete compliance with the National Electric Code and UL wiring and grounding requirements. We have seven U.S. patents (Patent No. 7,406,800, Patent No. 7,832,157, Patent No. 7,866,098, Patent No. 7,987,641, Patent No. 8,505,248, Patent No. 8,813,460, and Patent No. 8,938,919) that cover key aspects of our Andalay solar panel technology, as well as U.S. Trademark No. 3485653 for registration of the mark "Andalay Solar." In addition to these U.S. patents, we have eight foreign patents. Currently, we have 15 issued patents and nine other pending U.S. and foreign patent applications that cover the Andalay technology working their way through the USPTO and foreign patent offices.
In February 2009, we began our strategic relationship with Enphase, a leading manufacturer of microinverters, to develop and market solar panel systems with ordinary AC house current output instead of high voltage DC output. We introduced Andalay AC panel products and began offering them to our customers in the second quarter of 2009. Andalay AC panels cost less to install, are safer, and generally provide higher energy output than ordinary DC panels. Andalay AC panels deliver 5-25% more energy compared to ordinary panels, produce safe household AC power, and have built-in panel level monitoring, racking, wiring, grounding and microinverters. With 80% fewer parts and 5 - 25% better performance than ordinary DC panels, we believe Andalay AC panels are an ideal solution for solar installers and do-it-yourself customers.
As a result of our announced exit from the solar panel installation business, our installation business has been reclassified in our financial statements as discontinued operations. The exit from the installation business was essentially completed by the end of the fourth quarter of 2010.
Concentration of Risk
Financial instruments that potentially subject us to credit risk are comprised of cash and cash equivalents, which are maintained at high quality financial institutions. As of December 31, 2014 and 2013, we had no deposits in excess of the Federal Deposit Insurance Corporation limit of $250,000.
Concentration of Risk in Customer Relationships
Supplier Relationships
In May 2013, we entered into a new supply agreement for assembly of our proprietary modules with Environmental Engineering Group Pty Ltd ("EEG"), an assembler of polycrystalline modules located in Australia. In August 2013, we began receiving product from EEG and began shipping product to customers during the third calendar quarter of 2013. In September 2013, we entered into a second supply agreement for assembly of our proprietary modules with Tianwei New Energy Co, Ltd. ("Tianwei"), a panel supplier located in China. We began receiving product from Tianwei in February 2014 and stopped as of June 2014. In July 2014, we entered into a supply agreement for assembly of our proprietary modules with Auxin Solar, Inc., a panel supplier located in the United States. In December 2014, we began distributing panels from our new supplier. Although we believe we can find alternative suppliers for solar panels manufactured to our specifications, our operations would be disrupted unless we are able to rapidly secure alternative sources of supply, our inventory and revenue could diminish significantly, causing disruption to our operations.
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Historically, we obtained virtually all of our solar panels from Suntech and Lightway. During 2012, because of our cash position and liquidity constraints, we were late in making payments to both of these suppliers. On March 30, 2012, pursuant to our Supply Agreement with Lightway, we issued 1,900,000 shares of our common stock to Lightway in partial payment of our past due account payable to them. At the time of issuance, the shares were valued at $1,045,000. On May 1, 2012, Suntech filed a complaint for breach of contract, goods sold and delivered, account stated and open account against us in the Superior Court of the State of California, County of San Francisco. Suntech alleged that it delivered products and did not receive full payment from us. On July 31, 2012, we and Suntech entered into a settlement of this dispute. Because of our inability to make scheduled settlement payments, on March 15, 2013, Suntech entered a judgment against us in the amount of $946,438. As of December 31, 2014, Suntech has not sought to enforce its judgment. As of December 31, 2014, we have included in accounts payable in our Condensed Consolidated Balance Sheets a balance due to Suntech America of $946,438. We currently have no unshipped orders from Suntech or Lightway.
Customer Relationships
The relative magnitude and the mix of revenue from our largest customers have varied significantly quarter to quarter. During the year ended December 31, 2014, five customers have accounted for significant revenues, varying by period, to our company: Smart Energy Today ("Smart Energy"), which specializes in helping home owners and business owners become more energy efficient, WDC Solar, Inc. ("WDC"), a leading construction, integration and installation of commercial, residential and utility scale solar installations in the Washington D.C. area, JCF Wholesale ("JCF") a provider of residential and commercial electrical services in Southern California, Lowe's Companies, Inc. (Lowe's), a nationwide home improvement retail chain, and Sustainable Environmental Enterprises ("SEE"), a leading provider of renewable energy and development projects located in New Orleans, Louisiana. For the year ended December 31, 2014 and 2013, the percentages of sales of our top five customers are as follows:
Years Ended
December 31,
2014 2013
Smart Energy Today 13.3 % 13.5 %
WDC Solar, Inc. 12.0 % 14.7 %
JCF Wholesale 8.7 % 10.6 %
Lowe's 5.9 % 6.9 %
Sustainable Environmental Enterprises 1.3 % 52.8 %
The percentage of our gross accounts receivable for our top customers as of December 31, 2014 and 2013, are as follows:
December 31,
2014 2013
WDC Solar, Inc. 40.1 % -
Lowe's 16.8 % -
Sustainable Environmental Enterprises - 86.7 %
Smart Energy Today 6.5 % -
We maintain reserves for potential credit losses and such losses, in the aggregate, have generally not exceeded management's estimates. Our top three vendors accounted for approximately 39% and 25% of purchases as of December 31, 2014 and 2013, respectively. As of December 31, 2014 and 2013, accounts payable included amounts owed to these top three suppliers of approximately $0 and $1.0 million, respectively.
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Results of Operations
The following table sets forth, for the years ended December 31st, certain information related to our operations as a percentage of our net revenue:
2014 % 2013 %
Net revenue $ 1,288,985 100.0 $ 1,124,836 100.0
Cost of goods sold 1,191,390 92.4 1,121,612 99.7
Gross profit 97,595 7.6 3,224 0.3
Operating Expenses
Sales and marketing 366,543 28.4 887,305 78.9
General and administrative 2,263,086 175.6 2,377,703 211.4
Total operating expenses 2,629,629 204.0 3,265,008 290.3
Loss from operations (2,532,034 ) (196.4 (3,261,784 ) (290.0
Other Income (Expense)
Interest income (expense), net (362,955 ) (28.2 (65,031 ) (5.8
Adjustment to the fair value of embedded
derivatives (50,809 ) (3.9 65,962 5.9
Adjustment to the fair value of common
stock warrants - 0.0 9 0.0
Settlement of prior debt owed 769,148 59.7 420,000 37.3
Total other income, net 355,384 27.6 420,940 37.4
Loss before provision for income taxes (2,176,650 ) (168.9 (2,840,844 ) (252.6
Provision for income taxes - -
Net loss from continuing operations (2,176,650 ) (168.9 (2,840,844 ) (252.6
Gain from discontinued operations 324,349 25.2 10,797 1.0
Net loss (1,852,301 ) (143.7 (2,830,047 ) (251.6
Preferred stock dividend (18,927 ) (1.5 (153,305 ) (13.6
Preferred deemed dividend - 0.0 (875,304 ) (77.8
Net loss attributable to common
stockholders $ (1,871,228 ) (145.2 $ (3,858,656 ) (343.0
Net loss per common and common
equivalent share (basic and diluted)
attributable to common shareholders $ (0.01 ) $ (0.06 )
Weighted average shares used in
computing loss per common share: (basic
and diluted) 203,814,897 69,170,957
Year Ended December 31, 2014 as compared to Year Ended December 31, 2013
Net revenue
We generate revenue from the sale and installation of solar power systems. For the year ended December 31, 2014, we generated $1.3 million of revenue, an increase of $164,000, or 14.6%, compared to $1.1 million of revenue for the year ended December 31, 2013. The increase in revenue was due to an increase in watts sold, partially offset by a decrease in our average selling price per watt.
Cost of goods sold
Cost of goods sold as a percent of revenue for the year ended December 31, 2014, was 92.4% of net revenue, compared to 99.7% for the year ended December 31, 2013. Gross profit for the year ended December 31, 2014 was $98,000, or 7.6% of revenue, compared to gross profit of $3,000 or 0.3% of revenue for the same period in 2013. The increase in gross profit in the year ended December 31, 2014 compared to the year ended December 31, 2013, was due to lower solar module costs and lower inventory overhead allocations due to increase in revenue.
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Sales and marketing expenses
Sales and marketing expenses for the year ended December 31, 2014 were $367,000, or 28.4% of net revenue as compared to $887,000, or 78.9% of net revenue for the prior year. The $521,000 decrease in sales and marketing expenses for the year ended December 31, 2014 compared to the same period in 2013 was primarily due to decreases in licensing fees owed to Westinghouse Electric Corporation of $638,000, partially offset by an increase of $78,000 in payroll and commission expense. The decrease in licensing fees was due to the termination of the licensing agreement with Westinghouse Electric. The increase in payroll costs was due to higher headcount.
General and administrative expenses
General and administrative expenses for the year ended December 31, 2014 were $2.3 million, or 175.6% of net revenue, as compared to $2.4 million, or 211.4% of net revenue during the same period of the prior year. The decrease in general and administrative expense for the year ended December 31, 2014 of $115,000, or 4.8% of net revenue, compared to the same period in 2013, was due primarily to an decrease in rent expense of $112,000, bad debt expense of $55,000, insurance of $66,000, research and development expense of $65,000 and patent filing fees of $14,000, partially offset by an increase in payroll and benefits of $208,000, professional fees of $142,000 and stock compensation expense of $88,000. The decrease in stock compensation expense was due to the timing of restricted stock and stock option grants. The decrease in rent and insurance was due to the consolidation of our administrative offices with our warehouse. The increase in professional fees was primarily due legal and accounting consulting services. The decrease in patent filing fees was due to the filing of patents in the prior year. The increase in payroll and benefits expense was due to higher headcount.
Other Income, net
During the year ended December 31, 2014, other income was $355,000 compared to $421,000 for the year ended December 31, 2013. During the year ended December 31, 2014, we recorded a gain in other income of $769,000 as a result of a favorable settlement on a prior debt owed to a creditor. During the year ended December 31, 2013, we recorded other income of $420,000, net of legal fees, relating to the favorable settlement of a legal dispute relating to a supply agreement with a former customer.
Interest, net
During the year ended December 31, 2014, net interest expense was approximately $363,000 compared with net interest expense of $65,000 for the same period in 2013. The increase in interest expense was associated with the increase in notes payable and convertible debt.
Adjustment to the fair value of embedded derivatives
During the year ended December 31, 2014, we recorded mark-to-market adjustments to reflect the fair value of embedded derivatives, resulting in a loss of approximately $51,000 in our consolidated statements of operations.
Adjustment to the fair value of common stock warrants
During the year ended December 31, 2013, the fair value of the warrants was reduced to zero as a result of the decrease in the price of our common stock.
Income taxes
During the year ended December 31, 2014 and 2013, there was no income tax expense or benefit for federal and state income taxes reflected in our consolidated statements of operations due to our net loss and a valuation allowance on the resulting deferred tax assets.
Net loss from continuing operations
Net loss from continuing operations for the year ended December 31, 2014 was $2.2 million, compared to a net loss from continuing operations of $2.8 million for the year ended December 31, 2013.
Gain from discontinued operations
During the year ended December 31, 2014, we recorded a $324,000 gain from discontinued operations compared to a gain of $11,000 in the prior year. During the year ended December 31, 2014, we re-evaluated our warranty liability related to our discontinued installation operations and in conjunction with re-entering the installation operations, we reduced the liability by approximately $324,000.
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Liquidity and Capital Resources
We currently face challenges meeting the working capital needs of our business. Our primary requirements for working capital are to fund purchases for solar panels and microinverters, and to cover our payroll and lease expenses. For each of the two years in the period ending December 31, 2014, we have incurred net losses and negative cash flows from operations. During the recent years, we have undertaken several equity and debt financing transactions to provide the capital needed to sustain our business. We have dramatically reduced our headcount and other variable expenses. As of December 31, 2014, we had approximately $62,000 of cash on hand. We intend to address ongoing working capital needs through sales of products, along with raising additional debt and equity financing. In January 2013, our board of directors approved actions to dramatically reduce our variable operating costs, including a 12 person employee headcount reduction effective January 15, 2013, for the period through the anticipated merger closing with CBD, which merger was terminated in July 2013. No restructuring charges or severance payments were incurred. Our revenue levels remain difficult to predict, and we anticipate that we will continue to sustain losses in the near term, and we cannot assure investors that we will be successful in reaching break-even.
The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern. Our significant operating losses, negative cash flow from operations, and challenges in rapidly securing alternative sources of supply for solar panels, raise substantial uncertainty about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, and contemplate the realization of assets and the settlement of liabilities and commitments in the normal course of business. There can be no assurance that we will be able to raise additional funds on commercially reasonable terms, if at all. The current economic downturn adds uncertainty to our anticipated revenue levels and to the timing of cash receipts, which are needed to support our operations. It also worsens the market conditions for seeking equity and debt financing. As a result of our delisting from the Nasdaq Capital Market in September 2012, we are no longer eligible to file new registration statements on Form S-3, which may make it more costly and more difficult for us to obtain additional equity financing. We currently anticipate that we will retain all of our earnings, if any, for development of our business and do not anticipate paying any cash dividends on common stock in the foreseeable future.
Despite our recent financings, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements such as the Equity Purchase Agreement with Southridge and the loan and security agreement discussed below; however there can be no assurance that we will meet the conditions necessary to be able to use the Equity Line under the Equity Purchase Agreement (described below) or the loan and security agreement (described below). Other than the Equity Line and the loan and security agreement described below, we do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that any additional financing will be available to us on acceptable terms, or at all.
On January 22, 2014, we entered into a Settlement of Potential Claims Agreement (the "ASC Agreement") with ASC Recap LLC ("ASC"), an entity affiliated with Southridge. Pursuant to the ASC Agreement, ASC has offered to purchase (and in one (1) case has already purchased) approximately $3.7 million of our prior debt owed to four creditors ("Creditors") for past due services at a substantial discount to face value to which we have agreed to issue to ASC certain shares of our common stock in a ?3(a)(10) 1933 Act proceeding. The shares of common stock that we have agreed to issue to ASC in full payment for, and as a release of any debt it purchases from the Creditors, is anticipated to have, upon issuance, a market value equal to approximately 25% of the principal amount of our outstanding debt. In the case of the debt ASC already purchased from one (1) Creditor, we entered into a Settlement Agreement and Stipulation that was filed with the Circuit Court of the Second Judicial Circuit, Leon County, Florida pursuant to which we agreed, subject to court approval, to issue shares of our common stock that generate proceeds in the amount of $250,000 in full settlement of a claim in the amount of $1,027,705 that ASC Recap acquired from one Creditor (the value of the stock that we agreed to issue was two hundred and fifty percent (250%) of the discounted purchase price ASC paid to purchase the debt from the Creditor, and approximately 25% of the original amount we owed to the Creditor). The court subsequently approved the settlement and 8,079,800 shares were issued,
Convertible Notes payable
On August 30, 2013, we entered into a securities purchase agreement with Alpha Capital Anstalt ("Alpha Capital") relating to the sale and issuance of a convertible note in the principal amount of $200,000 that matures August 29, 2015 (the "Convertible Note"). Subsequently, on November 25, 2013 and December 19, 2013, we entered into additional securities purchase agreements with Alpha Capital relating to the sale and issuance of convertible notes in the principal amount of $200,000 and $250,000, respectively, which mature on November 25, 2015 and December 19, 2015. On January 27, 2014, we issued a convertible note in the principal amount of $100,000 that matures January 27, 2016 under the Securities Purchase Agreement we entered into with Alpha Capital on December 19, 2013. In connection with the issuance of the December 19, 2013 convertible note, we also issued 6,250,000 warrants to purchase shares of our common stock at a price of $0.02 per share. On February 25, 2014, we entered into a Securities Purchase Agreement with the Alpha Capital related to the sale and issuance of a convertible note in the principal amount of $200,000 that matures February 25, 2016. In connection with the issuance of the February 25, 2014 convertible note, we issued 5,000,000 warrants to purchase shares of our common stock at a price of $0.02 per share. On March 18, 2014, we entered into a Securities Purchase Agreement we entered into with the Alpha Capital related to the sale and issuance of a convertible note in the principal amount of $300,000 that matures March 18, 2016. In connection with the March 18, 2014 convertible note, we issued a five-year warrant to purchase 7,500,000 shares of our common stock at an exercise price of $.02 per share. Each of the Convertible Notes bear interest at the rate of 8% per annum compounded annually, are payable at maturity and the principal and interest outstanding under the convertible notes are convertible into shares of our common stock, at any time after issuance, at the option of the purchaser, at a conversion price equal to $0.02 per share, subject to adjustment upon the happening of certain events, including stock dividends, stock splits and the issuance of common stock equivalents at a price below the conversion price. Subject to our fulfilling certain conditions, including beneficial ownership limits, the convertible notes are subject to a mandatory conversion if the closing price of our common stock for any 20 consecutive days commencing six months after the issue date of the convertible notes equal or exceeds $0.04 per share. Unless waived in writing by the purchaser, no conversion of the convertible notes can be effected to the extent that as a result of such conversion the purchaser would beneficially own more than 9.99% in the aggregate of our issued and outstanding common stock immediately after giving effect to the issuance of common stock upon conversion.
We have the option of repaying the outstanding principal amount of the convertible notes, in whole or in part, by paying the purchaser a sum of money equal to one hundred and twenty percent (120%) of the principal together with accrued but unpaid interest upon 30 days notice, subject to certain beneficial ownership limits. For so long as we have any obligation under the convertible notes, we have agreed to certain restrictions regarding, among other things, incurrence of additional debt, liens, amendments to charter documents, repurchase of stock, payment of cash dividends, affiliated transactions. We are also prohibited from entering into certain variable priced agreements until the convertible notes are repaid in full, except for the Equity Line we have with Southridge.
Because of certain down-round protection in the conversion rate of the convertible notes, we determined that the derivative liability related to the embedded conversion feature met the criteria for bifurcation. Accordingly, we recognized an aggregate liability of $123,000 on the three issuance dates during the year ended December 31, 2014. This was in addition to the carrying value of the derivative liability on three previously recorded derivatives of $178,000. The derivative liability is carried at fair value with changes in the fair value reflected in the "Adjustment to the fair value of embedded derivatives" line item of our condensed consolidated statements of operations. We recognized a loss for the year ended December 31, 2014 of $51,000 on our convertible notes.
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The relative fair value of the warrants issued in the December 2013 convertible note issuance of $250,000, were allocated to additional paid-in capital. Such value was determined assuming volatility of 149.1%, a risk free interest rate of 0.7% and an expected term of 4.1 years. The resulting debt discount from the . . .
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MCET > SEC Filings for MCET > Form 10-Q on 14-Apr-2015 All Recent SEC Filings
Show all filings for MULTICELL TECHNOLOGIES, INC.
Form 10-Q for MULTICELL TECHNOLOGIES, INC.
14-Apr-2015
Quarterly Report
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This document contains forward-looking statements that are based upon current expectations within the meaning of the Private Securities Litigation Reform Act of 1995. It is our intent that such statements be protected by the safe harbor created thereby. This discussion and analysis should be read in conjunction with our financial statements and accompanying notes included elsewhere in this report. Operating results are not necessarily indicative of results that may occur in future periods.
Forward-looking statements involve risks and uncertainties and our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Examples of such forward-looking statements include, but are not limited to, statements about or relating to: our plans to pursue research and development of therapeutics in addition to continuing to advance our cellular systems business; our plans to become an integrated biopharmaceutical company; our use of proprietary cell-based systems and immune system modulation technologies to discover, develop and commercialize new therapeutics; our plans to continue to operate our business and minimize expenses; our expectations regarding future cash expenditures increasing significantly; our intent to gradually add scientific and support personnel; the expansion of our product offerings; additional revenues and profits; our ability to complete strategic mergers and acquisitions of product candidates; plans to increase further our operating expenses and administrative resources; future potential direct product sales; the sale of additional equity securities; debt financing; and/or the sale or licensing of our technologies.
Such forward-looking statements involve risks and uncertainties, including, but not limited to, those risks and uncertainties relating to difficulties or delays in development, testing, obtaining regulatory approval, and undertaking production and marketing of our drug candidates; difficulties or delays in patient enrollment for our clinical trials; unexpected adverse side effects or inadequate therapeutic efficacy of our drug candidates that could slow or prevent product approval (including the risk that current and past results of clinical trials or preclinical studies are not indicative of future results of clinical trials); activities and decisions of, and market conditions affecting, current and future strategic partners; pricing pressures; accurately forecasting operating and clinical trial costs; uncertainties of litigation and other business conditions; our ability to obtain additional financing if necessary; changing standards of care and the introduction of products by competitors or alternative therapies for the treatment of indications we target; the uncertainty of protection for our intellectual property or trade secrets, through patents or otherwise; and potential infringement of the intellectual property rights or trade secrets of third parties. In addition such statements are subject to the risks and uncertainties discussed under the "Risk Factors" section included in our Annual Report filed on Form 10-K for the fiscal year ended November 30, 2014.
Overview
MultiCell is a biopharmaceutical company which owns a majority interest in its two subsidiary companies, MCIT and Xenogenics. MultiCell and its subsidiaries are developing novel therapeutics and discovery tools to address unmet medical needs for the treatment of neurological disorders, hepatic disease, cancer and interventional cardiology and peripheral vessel applications.
MultiCell has an exclusive license and purchase agreement with Corning Incorporated ("Corning") of Corning, New York. Under the terms of such agreement, Corning has the right to develop, use, manufacture and sell MultiCell's Fa2N-4 cell lines and related cell culture media for use as a drug discovery assay tool, including biomarker identification for the development of drug development assay tools, and for the performance of absorption, distribution, metabolism, elimination and toxicity assays (ADME/Tox assays). Corning paid MultiCell a non-refundable license fee, purchased certain inventory and equipment related to MultiCell's Fa2N-4 cell line business, hired certain MultiCell scientific personnel, and paid for access to MultiCell's laboratories during the transfer of the Fa2N-4 cell lines to Corning. MultiCell retained and continues to support all of its existing licensees. MultiCell retained the right to use the Fa2N-4 cells for use in applications not related to drug discovery or ADME/Tox assays. MultiCell also retained rights to use the Fa2N-4 cell lines and other cell lines to further develop its Sybiol? liver assist device, to identify drug targets and for other applications related to the Company's internal drug development programs.
Our Therapeutic Platform
Our therapeutic development platform includes several patented techniques used to: (i) control the immune response at transcriptional and translational levels through double-stranded RNA ("dsRNA")-sensing molecules such as the Toll-like Receptors ("TLRs"), RIG-I-like receptor ("RLR"), and Melanoma Differentiation-Associated protein 5 ("MDA-5") signaling; (ii) generate specific and potent immunity against key tumor targets through a novel immunoglobulin platform technology; (iii) modulate the noradrenaline-adrenaline neurotransmitter pathway and (iv) develop next-generation antibody drug conjugates (ADCs) which provide for the simultaneous targeted delivery of multiple drugs from a single antibody. Our medical device development platform is based on the design of a next-generation bioabsorbable stent, the Ideal BioStent?, for interventional cardiology and peripheral vessel applications.
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Our therapeutic new drug candidate, MCT-125, we believe offers several key advantages, including selective modulation of noradrenergic neurons without influencing seratoninergic neurons to inhibit the reuptake of noradrenaline (norepinephrine) while promoting increased tyrosine hydroxylase activity for the treatment of primary multiple sclerosis-related fatigue (PMSF) affecting over 70% of all persons with multiple sclerosis ("MS").
Unlike other immune modulating compounds, our use of novel synthetic dsRNAs (MCT-485 and MCT-465) is not species or sequence-specific yet enables selective control of critical immune signaling pathways, and therefore has the potential in a broader spectrum of therapeutic applications as a monotherapy or in combination with other therapies.
Coupling our synthetic dsRNA platform technology with our therapeutic antibody-drug conjugate (ADC) technology we believe maximizes the potential creates a novel class of potentially more effective anticancer therapeutics.
Our portfolio of lead drug candidates is in various stages of discovery optimization, and preclinical and clinical development, and includes the following:
? MCT-125, a Phase 2 therapeutic candidate for the treatment of PMSF which has demonstrated efficacy in a 138-patient Phase IIa clinical trial;
? MCT-465, a preclinical synthetic dsRNA therapeutic candidate and potent immune enhancer for the treatment of solid tumor cancers such as those expressing TLR-3; and,
? MCT-485, a discovery stage dsRNA therapeutic candidate with tumor cytolytic properties for the treatment of certain cancers.
Our Therapeutic Programs
MultiCell is pursuing research and development targeting multiple sclerosis-related fatigue degenerative and cancer.
Our therapeutics candidates address unmet medical needs and are designed to augment current therapeutic strategies via:
? Modulation of the noradrenaline-adrenaline neurotransmitter pathway (MCT-125) for the treatment of primary multiple sclerosis fatigue (PMSF) affecting over 70% of all persons with MS;
? Triggering the adaptive immune response thru Toll-like Receptor 3 (TLR3) signaling of the innate immune system using dsRNA (MCT-465) to treat cancer;
? Triggering cytolysis using dsRNA (MCT-485) via activation of stromal macrophages and release of tumor necrosis factor alpha ("TNF-alpha"), interleukin 6 ("IL-6") and other pro-inflammatory cytokines; and
? Development of next-generation antibody drug conjugates (ADCs) which provide for the simultaneous targeted delivery of multiple drugs from a single antibody.
We believe our therapeutic development platform has several advantages over those of our competitors:
? Modulation of noradrenergic neurons without effecting seratoninergic neurons to inhibit the reuptake of noradrenaline (norepinephrine);
? Unlike DNA-based immunostimulatory CpG motifs or antisense and small interfering RNA (siRNA) technologies, our use of dsRNA signaling thru TLR3 is not species or sequence-specific, and therefore has the potential to have application in a broader spectrum of therapeutic applications. SiRNA, sometimes known as short interfering RNA or silencing RNA, is a class of dsRNA molecures 20-25 base pairs in length;
? Using very small dsRNA to trigger direct cytotoxic activity (cytolysis) via activation of stromal macrophages and release of TNF-alpha, IL-6 and other pro-inflammatory cytokines; and
? Able to deliver two different drugs simultaneously using a single targeted antibody-drug conjugates.
Our portfolio of lead drug candidates is in various stages of preclinical and clinical development and includes:
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? MCT-125, a Phase IIb therapeutic candidate for the treatment of PMSF with demonstrated efficacy in 138 patients;
? MCT-465, a preclinical adjuvant therapeutic candidate for the treatment of TLR3+ cancers; and
? MCT-485, a preclinical therapeutic candidate that appears to have direct cytotoxic activity (cytolysis)via activation of stromal macrophages and release of TNF-alpha, IL-6 and other pro-inflammatory cytokines.
On July 5, 2011, MultiCell entered into a sponsored research agreement with the University Health Network, or UHN, a not-for-profit corporation incorporated under the laws of Canada. Under this agreement UHN evaluated our product candidates, MCT-465 and MCT-485, in its in vitro models for the treatment of primary liver cancer. The mechanism of action of MCT-465 and MCT-485 and their potential selective effect on liver cancer stem cells was also be evaluated. Under the terms of this agreement, we retained exclusive access to the research findings and intellectual property resulting from the research activities preformed by UHN. On September 27, 2013, MultiCell entered into a new sponsored research agreement with Anand Ghanekar, M.D., Ph.D, of UHN's Toronto General Hospital expanding the scope of the current research project with UHN to evaluate MCT-485 in animal models for the treatment of primary liver cancer (the "Ghanekar Agreement"). Under the terms of the Ghanekar Agreement, the Company retained exclusive access to the research findings and intellectual property resulting from the research activities preformed by of Dr. Ghanekar. As of November 30, 2014, this sponsored research arrangement had concluded, but this research is continuing in a non-academic setting.
In December 2005, MultiCell exclusively licensed LAX-202 from Amarin for the treatment of fatigue in patients suffering from MS. MultiCell renamed LAX-202 to MCT-125, and intends to further evaluate MCT-125 in a pivotal Phase IIb/III clinical trial. In a 138- patient, multi-center, double-blind placebo controlled Phase II clinical trial conducted in the United Kingdom by Amarin, LAX-202 demonstrated efficacy in significantly reducing the levels of fatigue in MS patients enrolled in the study. LAX-202 proved to be effective within four weeks of the first daily oral dosing, and showed efficacy in MS patients who were moderately as well as severely affected. LAX-202 demonstrated efficacy in all MS patient sub-populations including relapsing-remitting, secondary progressive and primary progressive. Patients enrolled in the Phase II trial conducted by Amarin also reported few if any side effects following daily oral dosing of LAX-202. MultiCell intends to proceed with the anticipated Phase IIb/III trial of MCT-125 using the data generated by Amarin for LAX-202 following discussions with the regulatory authorities.
Our Medical Device Platform
Our medical device development platform is based on the design of a next-generation bioabsorbable stent, the Ideal BioStent?, for interventional cardiology and peripheral vessel applications. Xenogenics' bioabsorbable stent technology allows for the ability to layer different combinations of polymers and drugs, enabling the optimization of the delivery of combination drug therapies to provide superior clinical results. We believe the Ideal BioStent? represents a significant advance over currently available stents, including:
? The ability to promote positive vessel remodeling;
? A significant reduction in late-stent thrombosis risk;
? No metal artifact remaining in the patient's body after vessel healing; and
? The reduced need for long-term and costly anti-platelet therapy.
In animal testing and initial human use, the Ideal BioStent? demonstrated equivalence in safety, short-term efficacy and structural integrity when compared with today's leading bare metal stent and drug-eluting metal stent. Unlike other bioabsorbable stent technologies, the Ideal BioStent? showed no stent recoil, either acute or at six month follow up, remaining well apposed to the vessel wall. Furthermore, the Ideal BioStent? is designed to be fully absorbed at 12 months, leaving no artifact behind and allowing the vessel to heal and return to its natural state.
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On September 30, 2010, Xenogenics entered into the Foreclosure Sale Agreement with Venture Lending & Leasing IV, Inc., Venture Lending & Leasing V, Inc., and Silicon Valley Bank (collectively, the "Sellers"). Pursuant to the Foreclosure Sale Agreement, Xenogenics acquired all of the Sellers' interests in certain bioabsorbable stent assets, known as the Ideal BioStent?, and related technologies. Under the Foreclosure Sale Agreement, Xenogenics is also required to make cash payments totaling $4.3 million to the Sellers based on the achievement of certain milestones at certain dates. None of these milestones were achieved as of November 30, 2014. Xenogenics' obligations under the Foreclosure Sale Agreement have been extended pursuant to Amendments No. 1, No. 2, No. 3, and No. 4, dated September 30, 2011, October 23, 2012, October 11, 2013, and December 1, 2014, each extending the deadlines for the achievement of the milestones under the Foreclosure Sale Agreement by an additional 12 months. Xenogenics is required to use Good Faith Reasonable Efforts (as defined in the Foreclosure Sale Agreement) to achieve these milestones. Failure to achieve any of these milestones could result in all milestone payments, totaling $4.3 million, becoming immediately due and payable, unless Xenogenics' failure to use Good Faith Reasonable Efforts is due to Technical Difficulties (as defined in the Foreclosure Sale Agreement) or to Financial Hardship (as defined in the Foreclosure Sale Agreement), in which case Xenogenics can elect to (i) pay all remaining milestone payments and continue commercialization efforts, or (ii) assign all intellectual property acquired by Xenogenics under the agreement to the counterparties to the agreement and cease all development and commercialization efforts. Accordingly, Xenogenics has not accrued the $4.3 million commitment because the dates for achieving the milestones have been extended under the amendments to the Foreclosure Sale Agreement, and because Xenogenics also believes that the Financial Hardship exemption in the Foreclosure Sale Agreement would protect it in the future from any requirement to pay the $4.3 million.
Effective September 30, 2010, Xenogenics entered into the Rutgers License Agreement with Rutgers. Pursuant to the Rutgers License Agreement, Rutgers granted Xenogenics a worldwide exclusive license to exploit and commercialize certain patents and other intellectual property rights, as further described in the Rutgers License Agreement, relating to bioabsorbable stents for interventional cardiology and peripheral vascular applications. This agreement was terminated on May 9, 2014.
Recent Events
On March 10, 2015, MultiCell Immunotherapeutics, Inc. ("MCIT"), entered into a Research Agreement (the "Agreement") with Oxis Biotech, Inc. ("Oxis") to create three novel antibody-drug conjugates ("ADCs") containing Oxis' lead drug candidates, and by using MCIT's proprietary ADC platform technology. The Agreement contains a License Agreement between MCIT and Oxis wherein MCIT licenses to Oxis the exclusive right to sell the three ADCs product candidates. Under the terms of the Agreement, Oxis will pay to MCIT a fee of $500,000 for the licenses granted to Oxis ( of which $375,000 has been received by MCIT) and for the synthesis of a certain drug candidate being investigated by Oxis, and will reimburse MCIT up to $1.125 million for development costs for the three ADC product candidates. Oxis will also pay up to $12.75 million in clinical development milestones, and was granted an option to purchase manufacturing rights to the three ADCs upon payment of an additional $10 million. Additionally, Oxis will pay MCIT a royalty of 3% of net yearly worldwide sales and 30% of net sublicense revenue upon marketing approval of the ADCs
Results of Operations
The following discussion is included to describe our consolidated financial position and results of operations. The condensed consolidated financial statements and notes thereto contain detailed information that should be referred to in conjunction with this discussion.
Three Months Ended February 28, 2015 Compared to the Three Months Ended February 28, 2014
Revenue. Total revenue for the three months ended February 28, 2015 and February 28, 2014 was $12,329. All of the revenue for the three months ended February 28, 2015 and February 28, 2014 is from the amortization of deferred revenue under license agreements with Corning and Pfizer.
Operating Expenses. Total operating expenses for the three months ended February 28, 2015 were $301,206, compared to operating expenses for the three months ended February 28, 2014 of $321,822, representing a decrease of $20,616. This decrease was due to a decrease of $39,009 in the recognition of stock-based compensation, offset by an increase of $13,568 in shareholder meeting expense, and by an increase in other operating expenses of $4,825.
Other income/(expense). Other income (expense) amounted to net income of $8,723 for the three months ended February 28, 2015 as compared to net expense of $7,947 for the three months ended February 28, 2014. Other income (expense) for the three months ended February 28, 2015 was composed of (i) interest expense of $595, (B) a gain from the change in fair value of derivative liability of $9,312, and (C) interest income of $6. Other income (expense) for the three months ended February 28, 2014 consists of (i) interest expense of $700, (ii) a loss from the change in fair value of derivative liability of $7,259, and (iii) interest income of $12.
The change in fair value of derivative liability is related to the embedded conversion feature in the Series B convertible preferred stock. The valuation of the derivative liability is dependent upon a number of factors beyond our control. As such, the amount of other income or expense that we report related to the change in the fair value of the derivative liability is somewhat unpredictable, but may be significant, and will continue to be reported until the holders of the Series B convertible preferred stock have converted their shares into shares of our common stock.
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Net Loss. Net loss for the three months ended February 28, 2015 was $280,154, as compared to a net loss of $317,440 for the same period in the prior fiscal year, representing a difference of $37,286. This difference in net loss is principally due to the decrease in the recognition of stock-based compensation and the increase in shareholder meeting expense.
Liquidity and Capital Resources
The following is a summary of our key liquidity measures at February 28, 2015
and 2014:
February 28, 2015 February 28, 2014
Cash and cash equivalents $ 53,828 $ 240,965
Current assets $ 65,820 $ 266,239
Current liabilities (1,379,230 ) (1,376,092 )
Working capital deficiency $ (1,313,410 ) $ (1,109,853 )
Since our inception, a significant portion of our financing has been provided through private placements of preferred and common stock, the exercise of stock options and warrants and issuance of convertible debentures and other debt. We have in the past increased, and if funding permits plan to further increase, our operating expenses in order to fund higher levels of product development, undertake and complete the regulatory approval process, and increase our administrative resources in anticipation of future growth. In addition, acquisitions such as MCIT increase operating expenses and therefore negatively impact, in the short term, the liquidity position of the Company. We will have to raise additional capital in order to initiate Phase IIb clinical trials for MCT-125, our therapeutic product for the treatment of fatigue in MS patients, conduct further research on MCT-465 and MCT-485 for the treatment of primary liver cancer, and initiate clinical trials for Xenogenic's bioabsorbable, drug eluting stent, the Ideal BioStent?. Our management is evaluating several sources of financing for our clinical trial program. Additionally, with our strategic shift in focus to therapeutic programs and technologies, we expect our future cash requirements to increase significantly as we advance our therapeutic programs into clinical trials. Until we are successful in raising additional funds, we may have to prioritize our therapeutic programs and delays may be necessary in some of our development programs.
La Jolla Cove Investors, Inc.
We entered into the LJCI Agreement with LJCI on February 28, 2007 pursuant to which we agreed to sell the Debentures. In addition, we issued to LJCI a warrant to purchase up to 10 million shares of our common stock at an exercise price of $1.09 per share, exercisable over the next five years according to a schedule described in a letter agreement dated February 28, 2007. In August 2011, we and LJCI amended the Debenture and the LJCI Warrant to extend the maturity date of the Debenture and the expiration date of the LJCI Warrant to February 28, 2014. On February 20, 2014, we and LJCI amended the Debenture and the LJCI Warrant to further extend the maturity date of the Debenture and the expiration date of the LJCI Warrant to February 28, 2016.
The Debenture is convertible at the option of LJCI at any time up to maturity into the number of shares of MultiCell's common stock determined by the dollar amount of the Debenture being converted multiplied by 110, minus the product of the Conversion Price (defined below) multiplied by 100 times the dollar amount of the Debenture being converted, with the entire result divided by the Conversion Price. The "Conversion Price" is equal to the lesser of $1.00 or 80% of the average of the three lowest volume-weighted average prices during the 20 trading days prior to the election to convert. The Debenture accrues interest at 4.75% per year payable in cash or shares of common stock. Through February 28, 2015, interest is being paid in cash. If paid in shares of our common stock, the stock will be valued at the rate equal to the Conversion Price of the Debenture in effect at the time of payment. Upon receipt of a conversion notice from the holder, MultiCell may elect to immediately redeem that portion of the Debenture that the holder elected to convert in such conversion notice, plus accrued and unpaid interest. Since February 28, 2008, we, at our sole discretion, have had the right, without limitation or penalty, to redeem the outstanding principal amount of the Debenture not yet converted by the holder into shares of our common stock, plus accrued and unpaid interest thereon.
Commencing in March 2008, we have operated on working capital provided by LJCI in connection with its exercise of warrants issued to it by us (which LJCI must exercise whenever it converts amounts owed under the Debenture it holds), all as discussed in more detail below. The warrants are exercisable at $1.09 per share. As of April 7, 2015 there were 3,572,629 shares remaining under the LJCI Warrant and a balance of $35,726 remaining on the Debenture. Should LJCI continue to exercise all of its remaining warrants approximately $3.9 million of cash would be provided to us. However, the LJCI Agreement limits LJCI's stock ownership in our common stock to 9.99% of the outstanding shares of our common stock.
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We expect that LJCI will continue to exercise the LJCI Warrant and convert the Debenture February 28, 2016, the date that the Debenture is due and the LJCI Warrant expires, subject to the limitations of the LJCI Agreement and availability of our authorized common stock, but cannot assure that LJCI will do so. We anticipate that our future cash requirements may be fulfilled by potential direct product sales, the sale of additional equity securities, debt financing and/or the sale or licensing of our technologies. We also anticipate the need for additional financing in the future in order to fund continued research and development and to respond to competitive pressures. We cannot guarantee, however, that enough future funds will be generated from operations or from the aforementioned or other potential sources. If adequate funds are not available or are not available on acceptable terms, we may be unable to fund expansion, develop new or enhance existing products and services or respond to competitive pressures, any of which could have a material adverse effect on our business, results of operations and financial condition.
Series B Convertible Preferred Stock
On July 14, 2006, we completed a private placement of Series B convertible preferred stock. A total of 17,000 shares of Series B convertible preferred stock were sold to accredited investors at a price of $100 per share. Originally, the Series B shares were convertible at any time into shares of our common stock at a conversion price determined by dividing the purchase price per share of $100 by $0.32 per share (the "Series B Conversion Price"). The Series B Conversion Price was reduced to 85% of the then applicable Series B Conversion Price as a result of an event of default in the payment of preferred dividends. The Series B Conversion Price is also subject to equitable adjustment in the event of any stock splits, stock dividends, recapitalizations and the like. In addition, the Series B Conversion Price is subject to weighted average anti-dilution adjustments in the event that we sell shares of our common stock or other securities convertible into or exercisable for shares of our common stock at a per share price, exercise price or conversion price lower than the Series B Conversion Price then in effect in any transaction (other than in connection with an acquisition of the securities, assets or business of another company, a joint venture and/or the issuance of employee stock options). As a result of these adjustments, the Series B Conversion Price has been reduced to $0.0063 per share as of February 28, 2015. Pursuant to the applicable Series B convertible preferred stock purchase agreement, each investor may only convert that number of shares of Series B convertible preferred stock into that number of shares of our common stock that does not exceed 9.99% of the outstanding shares of our common stock on the date of conversion. The Series B convertible preferred stock does not have voting rights.
Commencing on the date of issuance of the Series B convertible preferred stock until the date a registration statement registering the common shares underlying the preferred stock and warrants issued was declared effective by the SEC, we were required to pay on each outstanding share of Series B convertible preferred stock a preferential cumulative dividend at an annual rate equal to the product . . .
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Investment firm EMG moves to remove itself from Chesapeake lawsuit
April 14 (Reuters) - Energy & Minerals Group (EMG), which has invested billions in oil and gas ventures with former Chesapeake Energy Corp Chief Executive Officer Aubrey McClendon, has moved to extricate itself from a lawsuit filed by Chesapeake alleging McClendon stole its trade secrets and used them to build up his new businesses.
Houston-based EMG, a private investment firm led by John Raymond, said on Tuesday it reached an agreement with Chesapeake to remove American Energy-Utica (AEU) and unnamed investors from the lawsuit Chesapeake filed in February against McClendon's new firm, American Energy Partners (AEP) and affiliates. American Energy-Utica is an oil and gas venture controlled by EMG focused on the Utica shale play.
EMG said it has been informed that Chesapeake's lawsuit against AEP, where McClendon is CEO, and several other entities linked to him will continue. But Chesapeake will drop all claims against AEU and the unnamed investors in exchange for approximately 6,000 acres of oil and gas leases in the northern Harrison County region of the Utica shale play in Ohio, and up to $25 million in cash, EMG said.
McClendon will no longer serve as an officer of American Energy Utica, EMG said.
(Reporting by Brian Grow in Atlanta and Joshua Schneyer in New York; Editing by Jeffrey Benkoe)
Where Is The Run Up Before The Binary Event? Can someone check this article from S.A.
http://seekingalpha.com/article/3067206-athersys-where-is-the-run-up-before-the-binary-event?page=2
Sounds like a good plan.
NY TIMES BUSINESS SENATOR QUESTIONS DIVERSION OF FANNIE AND FREDDIE EARNINGS
http://www.nytimes.com/2015/04/08/business/charles-grassley-questions-diversion-of-fannie-and-freddie-earnings.html?_r=0
Morningstar Assigns BB+ Credit Rating to Chesapeake Energy (CHK
http://www.mideasttime.com/morningstar-assigns-bb-credit-rating-to-chesapeake-energy-chk/394874/
Financials out