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Re: None

Tuesday, 03/25/2014 11:18:35 PM

Tuesday, March 25, 2014 11:18:35 PM

Post# of 106837
Sales were insignificant- not even close to "stopping dilution" as was posted many times previously.

Page 54, 10-K:
We recognized revenues of $96,085 in 2013 compared to revenues of $61,109 in 2012

Cost of sales consists of the costs associated with the production of MyoCath.

Cost of sales was $30,831 in the twelve-month period ended December 31, 2013 compared to $1,070 in the twelve-months ended December 31, 2012.

So they netted, or had a gross profit on the 2013 sales of $96,085-$30,831 = $65,254.00 / 12 = about $5K a month. That's a pimple on their cash use/burn rate.


Net cash used in operating activities was $1,913,326 in 2013 . (I'm not even sure if cash for interest on debt would need to be added into that number, pretty sure it would- their report is confusing to me, but lets just use that number above- since costs/cash use appear to be going up if anything from their statement of hiring a few people etc)
$1,913,326 / 12 = about $160K a month, cash needed to keep operations going "as-is", keep the lights on, pay themselves, whatever else they are doing.

So, $5K in sales / $160K cash used in operations = 3% of cash needs. Not hardly "stopping dilution" by any stretch. And again, I believe, need to read more- that they actually need more than that coming in to service debt interest and other cash going out. But $160K would appear to be a bare, bare minimum.

Also, as it appears in last 10-Q's, my opinion is the SG&A costs are mega high to the R&D budget and the size of the company- just my 2 cent opinion. But it seems most of the money goes to pay themselves or whatever "stuff" falls under SG&A, salaries usually being the biggest in that category (their rent is like $65K a yr, they say they carry no product liability insurance in the doc, etc- so what else would it be spent on?)

PAGE 61:

Research and Development

Research and development expenses were $626,983 in 2013, an increase of $225,042 from research and development expenses of $401,941 in 2012. The increase was primarily attributable to an increase in the amount of available funds.

The timing and amount of our planned research and development expenditures is dependent on our ability to obtain additional financing.

Marketing, General and Administrative

Marketing, general and administrative expenses were $2,267,831 in 2013, an increase of $89,479 from marketing, general and administrative expenses of $2,178,352 in 2012. The increase in marketing, general and administrative expenses is attributable, in part, to an increase in legal fees, salaries and insurance expenses.

Interest Expense

Interest expense was $1,437,883 in 2013 compared to interest expense of $1,619,653 in 2012. Non cash interest comprised of amortization of debt discounts and warrants issued in connection with debt totaled $597,339 in 2013 as compared to $657,081 in 2012. In addition, in 2012, we issued warrants in connection with a forbearance agreement with Northstar at a fair value of $430,213; in 2013 we issued preferred stock in in connection with a forbearance agreement with Northstar at a fair value of $274,050.

So about $600K was spent on R&D (trials, etc) and their Marketing (they have none really- they don't sell anything for the most part) GENERAL and ADMINISTRATIVE- the big ones in my opinion (salaries) was $2.2 million or almost 4X the R&D budget for a 4 or 5 person operation? Doesn't make sense to me, but that's my opinion?

It looks like Tomas and Comella got big salary (like BIG percentage wise) boosts or bonuses also on the compensation page (someone posted a while back- Tomas is RICH RICH (exact word the post used) and that he takes no pay)- but that's not what this document is saying:

PAGE 71:

Summary Compensation Table

The following table sets forth, for the fiscal years ended December 31, 2012 and 2011, the aggregate compensation awarded to, earned by or paid to our Chief Executive Officer and our two most highly compensated officers (other than the Chief Executive Officer), who were serving as executive officers as of December 31, 2013, or the Named Executive Officers.

Tomas $391K in salary + $375K bonus
Comella $159K + $125K bonus
Plus a bunch of options

(1)
On August 1, 2013, Mr. Tomas and Ms. Comella received $375,000 and $125,000, respectively, promissory notes for bonuses awarded. The promissory notes bear 5% interest per annum, unsecured and are due on demand.
(2)
On August 1, 2013, Mr. Tomas and Ms. Comella were granted 10,000,000 and 5,000,000, respectively, options to purchase the Company’s common stock at $0.01576 per share for ten years, vesting annually over four years.
(3)
On September 1, 2013, Mr. Tomas, as a member of the Company’s Board of Directors, was granted 400,000 options to purchase the Company’s common stock at $0.01654 for ten years, vesting immediately.

So, just those base salaries alone, for TWO people would consume $391K + $159K = $550K / 12 = $45K a month of their cash needs/use of $160K. That's 25% of cash used- going to pay TWO PEOPLE.
It's almost equal to their R&D budget (R&D for yr was about $626K), WOW. TWO people in a 4 or 5 person company (yahoo lists 4 full time employees), consuming-getting paid close to the entire R&D budget of what's deemed a "R&D development stage company"? And that's not including their bonuses listed- which would have them receiving more than the entire R&D budget for just 2 people? Wow? Tomas with base + bonus + options for 2013 has a compensation listed of $936,804.00 for a 4 or 5 person company with no sales, very little cash, lots of dilution and a micro penny stock price? Wow again IMHO.

I've worked for very profitable companies with about $200 million in sales, 1000 plus employees- and that's about what the CEO or maybe the most Sr. VP was pulling down, probably even less base salary for VP's- only making that much if they sold options they'd built up over yrs and yrs of working a very successful, highly profitable, NASDAQ listed company with a market cap of $400 million or so.

My 2 cents again, seems out of whack cost structure to me- but hey, that's just me. That's my take on some of the basic numbers- just my math, my number crunching and opinion only- could be wrong, it's late, I'm tired from reading the 10-K. But wow, it looks lopsided IMHO.