Great analysis- totally agree. It's more or less where my thoughts had been pondering. As in:
a) Is it just "clearing the books" as the license was never really used? But what does it mean when they state even in the recent 10-K of "obligations" (their words) of something like $200K for 2012 and 2013 respectively not being paid, due on this Beaumont arrangement? Again, that's like a creditor not being paid- which another potential creditor/investor might view as weak, not honoring a past commitment IMO?
b) Flip side, it does reduce that bottom balance sheet entry of total debt/obligations via subtracting out that accrued expense line. But if you're the guy on the other end, Beaumont Hospital, also a business- how do they like "negotiating away" what would have been apparently $2.1 mil or so coming to them supposedly in installments, but never any payments made, and carried forward to essentially to today, when they decided to just "let it go" and I guess take an accounting entry/write down loss of some sort?
c) In latest 10-K just out, BHRT paid themselves/indicated things like increased salaries (pretty big increases IMO) for some key people, including bonuses in the most recent 10-K, spent over $600K cash on R&D, almost 3X that on SG&A expenses, but didn't make an attempt to pay Beaumont anything? Don't know how that's viewed by outside investors/professional types- it's beyond my knowledge and scope? Who knows? If Beaumont was truly owed - wouldn't even some partial payments have perhaps been paid to them?
All kinds of questions come up as stated. Is it that Beaumont was making a "demand" on this debt/obligation as stated previous post- and this is Cassel "working their magic" at being good at what they do and "negotiating a settlement" of this obligation? Maybe? Is it an indicator as stated, that cash/cash flow is even tighter than maybe even anyone is speculating from the last 10-K?
All good questions. And as several have stated - it's conjecture, guesses, opinions, thoughts as to is it a "net" good or bad at this point and what does it mean in the "big picture"? Don't know myself? I just always wonder about a "debt discharge" or "debt negotiated away" type deal- as it means someone, another business/creditor or in this case some type of license agreement didn't apparently get paid something owed/promised. Not that this stuff doesn't happen I'm sure all the time in business- but is it a net "good" or "bad" for which party, is hard to say IMO?
There must have been a reason BHRT carried it as an "expense" on the books all this time- as in they say they had an "obligation". But when I read that 10-K statement about the original deal- it also indicates that if certain sales thresholds and stuff weren't met, then BHRT would lose "exclusivity"- meaning it almost sounds like they didn't owe the royalty then if they never met the threshold and gave up exclusivity? But that seems like it can't be true- else, they wouldn't have had to use "accrual" accounting and carry it as a obligation/expense with interest due for all this time building up to $2.1 mil, and the 8-K is also describing it as a "settlement of debt" as in the two parties appear to have somehow mutually agreed to a termination and then debt forgiveness to BHRT, who it appears must now book it as a "gain" for accounting purposes on the other side of the ledger as the expense is being erased.
Anyway, good input/thoughts IMO, and it's not clear or cut n dry as we don't have all the "inside baseball" or negotiation details or accounting details. Perhaps the next 10-Q is going to add a little more verbiage as to the exact details and accounting entries as to how this was handled? We'll see.
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