Repro Med Systems Inc (REPR)

[mrholty]

Good: Sales were up by 25% vs Q2 2013.
Gross margin hit a high since Q2 2012 at 65.3%. last few quarters have been in the 58-61% range.

Bad:
Sales are down 5% over the prior quarter, Q1.
Expenses has risen as fast as cash. We can see this is in the SG&A and R&D.

Trailing 4Q has EPS of $.024. Put a 20x on that you get a $.48/share value. good.
Last 2Q with very good sales only has $.01 or $.02. Trading at 18x.

They have spent an extra $240k in SG&A and R&D in Q2 vs Q2 2013. If we had SG&A at Q2 2013 levels we would have had sales of $.012 for the quarter vs $.005/quarter. If we had Q2 2012 expenses we would have had $.02/share of earnings.

They got the markets attention by jumping their sales in Q4 2013 (Feb 28, 2014) by going up 25%. Since then they have flatlined and more negatively their expenses have grown faster than revenues. When I worked in mfg. we had a mandate to grow fixed expenses no faster than 70% of topline growth. That was manageable. I gave last quarter a pass. I can't again.

I'm not adding but holding.