Read past page 19.
Gotta tell ya, I was more than a little disappointed when I started reading the 10k. Even down to page 19 I was fuming quite a bit regarding the amount of the loss and the revenues. Revenues were way below what I anticipated and the loss was a bit more than what I thought it should be.
I could restate some poor results and negatives here, but I really think most of the people who read the first 19 pages probably sold today and didn't read the rest of it and didn't care to read the rest of it because they were looking for a 20 percent pop and then to be gone.
However, there are some really great things mentioned in there that are worth taking note of:
First the preferreds are owned largely by Dean and Brooks.
They anticipate selling 125,000 a month for the next 12 months. They can convert the preferreds and have a buttload of shares to sell if they wanted. If they intended to dilute the heck out of us, then they would be committing to sell a shitload more shares than 125k a month. It's nothing. I take this as outlook = pretty damn good.
Barry owns 8 percent of Series A.
Barry owns 100 percent of Series B.
Barry and Dean together own 70.2 percent of Series C.
Together they have a BUNCH of shares.
Second, they paid over $500,000 in interest in 2007. Forgive me for not including the exact number, I cannot find it now, but much of that will not be incurred going forward. I think
Third, they recognized $320,661 as a fluff conversion loss.
"At various dates from December 12, 2007 through December 31, 2007, the market closing price of the common stock was greater than the $0.01 conversion price, thereby resulting in the recognition of an aggregate beneficial conversion cost of $320,661. The 2007 loss of $1,510,814 includes this beneficial conversion cost and is taken into account when calculating loss per common share."
Fourth, they lost $60,140 for early cancellation of the debentures. That will not be repeated.
Fifth, they anticipate spending $400,000 to $500,00 on a sales force. That equates to around $42,000 a month. If you look at their anticipated cash flow burn rate of $242,000, they are within $50,000 a month of becoming CF neutral and THAT is the full 2007 average, not a 3 month average. (I cannot emphasize this point enough, it is KEY) Also, consider that $12,500 of that would be an interest payment of .01 on the 1,250,000 shares of Series B that Barry owns 100 percent of....more to come with this thought later once I've postulated on it for a few days.
Finally...
"The balance of the proceeds raised from the Series A offering will be used to fund the Company’s operating shortfalls over the next three quarters."
Pretty bad read down to page 19, but it got a helluva lot better after that.
