Metsin6...
>>Please explain why it will take a "whale" of a lot more to get CCSI profitable.<<
Since in your profile you state that you "like to make fun of people who think they are smarter than you," I first want to assure you that even though I am about 30+ years your senior, I am not trying to be smarter than anyone.
I am not a financial guru however, just looking at CCSI's financial statements at least to me, it indicates they have a long way to go before hitting profitability.
The following figures are for trailing 12 months:
Sales $279K that's thousands and not millions!
Income Negative 9.78 Million
Note, that in the last Q their reported revenue was $55K (mostly from interest income at that) or a yearly run rate of $220K, less than their actual ttm revenue!
Their losses in their most recent Q was a healthy $3.8M or a run rate of over $15 million!
Price to sales is a hefty 340! Amazon (AMZN) is only 18 and many people seem to think that they are way overvalued but lets not get into that.
Back to their financial statement.
Their cash on hand at end of their most recent Q is $7.86 Million. Now when you are losing over $9 million, (and a current run rate or over $15M) that loosely translates to about 2-3Q's of cash reserves.
By the way, their interest costs alone for the last Q was a stunning $1.5 Million taken from their most recent 10Q report.
Surely increased revenue will change that however, stop and think about the amount of revenue growth that they will need to develop.
Lets assume that they will generate approximately $150K this Q. That is a run rate of $600K/yr. They would need to grow approximately 100% every year for the next four years to meet their current losses! I know that they might grow faster than 100% a year( I do not think they can but that is what makes a market) but with any fast growing company, expenses also grow.
Now lets get into their management. From their SEC filings,
>>On July 30, 1997, the Company was granted clearance by the FDA for commercial marketing of the ColorMate(Registered) TLc BiliTest(Registered) System for the non-invasive detection and monitoring of bilirubin infant jaundice in newborns by health care professionals in hospitals, pediatricians' offices or by home healthcare agencies. <<
From the time it took them to get clearance to the time it took to sign a distribution agreement was very close to 2 years as their agreement with Ohmeda was on June 7 1999. Almost two years from the time of FDA clearance. That does not sound to me like a management team that is going to grow at a rate that will simply cover their losses.
More from their 10Q on expenses going forward.
>The Company anticipates incurring significant additional expenditures related to manufacturing expenses, parts order, insurance, regulatory compliance and
staffing and marketing expenses for the sales division as production and distribution continues over the next year<<
Hmmm, I wonder what their expense run rate will be and I wonder what they mean by significant additional expenditures?
The next Q report will be interesting to see.
Regarding their long term financing, from the 10Q,
>>the Company will have sufficient liquidity at least until July 2000.<< Hmmm, that is about 2Q's from now.
There are some legal issues that I will not go into however, from their 10Q I do find this interesting.
>>Further, the Company anticipates significantly higher legal expenses in connection with its defense of certain
class action suits that have been brought against the Company and as the Company explores all of its potential legal remedies.<<
Hmmm, I wonder what they mean by significantly higher legal expenses?
Now if I were a good financial person, I would be able to look more closely at their financing and the potential for dilution. I expect that it will also have a negative impact for current shareholders.
Finally, I really do not see a real need for the product. Pin pricking a baby is not all that bad and has served the purpose for a good many years. but that is only an opinion and does not mean anything. I surely could be wrong on that.
With all that said, their stock is up $1 as I write. therefore, I just might not be as smart as I hope on my assessment of CCSI.
Good Luck.
Bob T. |
