Jon, I understand and share your concerns. But cash does not seem to be a problem, for the next 6 months to a year. The November 1996 9 mo.report indicates there was at that time$1.2 mln in cash, and that working capital exceeded $1 mln. Burn rate is less than $1mln/yr.
What I think this means: the cash and WC are not to be added. But WC is current assets less current liabilities. Total assets (not current) would include the copyright and patent rights on which Paige Inn. is founded, and which are good enough to attract imitators such as Noma!
The debt/book ratio is about 5:1 as of 11/96. This is high leverage. (Book = shareholder equity of 1.8 million$ or about 12 c/share.) Cash flow is not so good at this stage, but PAG is in the awkward phase of retooling for low-cost production. So CF/debt is meaningless.
The lawsuits:
PAG has had directors from its customer or distributors -- and as CR Lum has noted, PAG had disagreed with how they have used PAG intellectual property. For me to say more would be slanderous.
It is my belief that de Souza Costa is firm and agressive, and knows what he is doing. He took charge of PAG because he had a majority interest -- there is no advantage to him in bankrupting PAG or driving down stock prices.
de Sousa Costa is betting the farm on these suits, which I believe to have merit -- if you remember Rolex knockoffs and Corel CD pirates,
you might agree. Taiwan is not Japan.
I'm holding shares I bought at .30. Have bought others and sold at a profit along the way. Will hold, but not sure if I'd buy now.
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Fred.
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Paige Innovations Inc - News Release
9mo financial results
Paige Innovations Inc PAG Shares issued 13879504
1996-11-27 close $0.18
Thursday Nov 28 1996
News Release
Dr Alberto de Sousa Costa reports The third quarter of fiscal 1996 was challenging for the management of Paige Innovations.
Paige terminated the licensing agreement with Pacific Electricord, an exclusive distributor of
FlatPlug in North America at the end of August 1996. PECO, in association with Fu-Won
Electrical, a manufacturer for PECO based in the People's Republic of China, willfully
infringed upon Paige's patent by manufacturing substandard counterfeit FlatPlug power
supply cords.
This termination adversely affected Paige's financial results. The inevitable legal suits that
followed significantly increase legal, consulting and associated costs which are reflected in
the selling and administration expenses in the third quarter of 1996.
Legal proceedings are in progress and management, along with legal counsel are confident
of a positive outcome in favor of Paige.
Paige has implemented an active worldwide surveillance management system to protect its
proprietary rights. Paige will continue to aggressively pursue the prosecution of those
parties that infringes upon its proprietary rights.
In order to capture a significant share in the conventional electrical plug market, Paige is
actively negotiating new licensing agreements with strategic original equipment
manufacturers in the Asia Pacific region. When concluded, the new arrangement will provide
for a substantial increase in revenue and better control on product evolution and
development. It should be noted that in this quarter, Paige completed the long process,
begun in 1994, of certification and delivery of the first quality assured FlatPlug production
run for the Japanese market. Since this market can now be effectively addressed, Paige is
finally poised to enter the consumer retail market in Japan.
In addition thereto, the application of advanced manufacturing process technology and
development of new product design is planned for introduction on a production basis during
the first quarter of 1997. This will result in the reduction of production costs of FlatPlug to
near parity with conventional plugs, which in turn will lead to significant inroads into the
highly competitive OEM market sector worldwide.
Financial Results
The losses for the nine months ended September 30 1996 are a reflection of poor sales
performance by the North American exclusive licensee and subsequent termination of the
licensing agreement.
Included in third quarter 1996 operating expenses are a writedown of obsolete inventory in
the amount US$45,000 and a bad debt provision of US$73,000.
The company continues to maintain a relatively strong balance sheet, with US$1.2 million in
cash and over US$1.0 million in working capital. At the end of the quarter shareholders
equity was US$1.8 million with no long-term debts resulting in a debt to equity ratio of 0.18:1.
STATEMENT OF EARNINGS
Three months ended September 30
(US$000's)
1996 1995
Sales $ (2) $ 56
Royalties 63 192
-------- --------
61 248
Cost of sales - 51
-------- --------
Gross profit 61 197
-------- --------
Operating costs
and expenses:
Selling and admin 625 161
International market
development 44 65
Research and
development 47 73
Depreciation 22 19
-------- --------
Total costs and
expenses 738 318
-------- --------
Income (loss) before
income tax $ (677) $ (121)
======== ========
Earnings (loss)
per share $ (0.049) $ (0.010)
STATEMENT OF EARNINGS
Nine months ended September 30
(US$000's)
1996 1995
Sales $ 31 $ 143
Royalties 325 650
-------- --------
356 793
Cost of sales 29 149
-------- --------
Gross profit 327 644
-------- --------
Operating costs
and expenses:
Selling and admin 895 674
International market
development 128 224
Research and
development 90 200
Depreciation 58 55
-------- --------
Total costs and
expenses 1,171 1,169
-------- --------
Income (loss) before
income tax (844) (515)
-------- --------
Earnings (loss)
per share $ (0.061) $ (0.040) |
