RedChip Report is 25 Pages, another snippet
RedChip represents NYSE stocks that have billion+ mkt caps. XCHO apprears to be the smallest company they do research on.
The table below lists the retail chains that have signed Cobroxin sales agreements, with those that are
currently selling the product in bold face.
THIS TABLE DID NOT COPY
Favorable product economics.
Based on the first quarter Form 10-Q and discussions with management,
XenaCare sells Cobroxin to retailers for approximately $10 per bottle. Associated expenses are an
apparent $3 per bottle to purchase finished and packaged product from Nutra Pharma—for a gross margin
of approximately 70%--a 7% commission to distributors, and an 8% commission to independent sales
reps.
The other major elements of overhead are general and administrative expenses, which management expects
to remain level at roughly $33,000 per month for at least the next several quarters, and advertising, which
we estimate was approximately $230,000 in Q1.
Looking ahead, we expect gross margin to decline somewhat as the company starts selling to “big box”
chains, which typically exact discounts from their vendors. We project that the gross margin will drop
to 68% from 70% over the next few years. We expect no change in the distributor and sales commission
rates.
We estimate that the advertising budget for the Cobroxin rollout phase, from last October through 2011,
is approximately $16 million, with discounts likely to bring actual outlays down significantly. We expect
the company to spend roughly $300,000 per month for the rest of 2010 and $500,000 per month in 2011.
At that rate, advertising would equal about 23% of projected sales in 2011, which we would expect to be
the peak ratio. By 2015, we estimate that advertising, although higher in dollars, will have been reduced
to 12.5% of sales.
AI
