Hearx(EAR) Message Board

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Microcap & Penny Stocks : Hearx(EAR)

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To: Lee Bush who wrote (105)	4/3/1997 12:24:00 PM
From: Lee Bush	of 383

I received their latest mailing yesterday reporting year-end results. Revenues up 65% from 11.2 to 18.5m. Expansion from 26 Florida to add 34 new centers in NY, NJ, CT. They now have 72 centers. Operating loss increased from 2.2 to 7.9m (ouch!). The FL centers were profitable with a 16.5% incr in revenue. Reason for the huge increase in loss was the requirement to open new centers before Health Care Financing Admin. approval request. Actually, the total loss for the company, including the dividend and the deemed dividend (non-cash items) on the convertible preferred stock isued in May of 1996 was 17.9m (double ouch!). This amounts to a net loss per share of $.25, or about 10% of the stock price. Any questions about the decline in the stock price now? The $10m convertible preferred will be overhanging the common stock as it becomes convertible (a complicated formula): no conversions until 90 days unless above $5.00, 60 days under $5.00 at market price. Only 50% can be converted at a 15% discount every 90 days thereafter, with a limit of $5.00 per share. The company will pay a 6% premium on conversion. We will have to wait at least another quarter to see if these losses in NY area were actually due to start-up and turn around. Lee

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