InvestorsHub Logo
icon url

Toxic Avenger

12/02/10 8:07 PM

#2007 RE: rage #2006

Good luck. I don't think this PR is going to do a lot. This isn't a pinkie. It's great to say they have a new plan that doesn't require any cash for over a year, but the last plan promised the same thing and didn't come close to being realized.

If you look at the past results, there's a pattern of reducing expenses one quarter and getting reduced losses as well as sales gains, then more spending, greater losses and flat or more slowly increasing sales the following quarter, then reducing expenses ...

The thing they have to find is a way to reduce losses (significantly in fact from last Q's $5 million). IMHO that means large scale reductions in distribution and marketing and an increase in margins (which will go hand in hand with eliminating big box retail and supermarkets). The problem is, if you go back to 2009 with its almost 50% gross profit margin on $6 million in sales, they still had $10 million in overhead versus $3 million in gross profit. Last quarter's OH rate annualized is $20 million. Even if they can cut that in half and get the gross margin up to 50%, they'll need $5 million in sales a quarter to break even.
So you're talking about bringing margins back up to the highest they ever were, cutting expenses by 50% and tripling sales, all while consuming less than $6 million in cash. I'm sure it's theoretically possible, but given the track record so far, I wouldn't want to put my money at risk betting on it.
icon url

buyittradeit

12/03/10 6:18 AM

#2012 RE: rage #2006

You maybe right. Time will tell.:-)