Of course I understand the difference between cash flows from operations and cash flows from investing activities. That should be obvious from the comments in my message that you replied to. You must have missed them, so here they are again.
It doesn't matter if the money came from the financing activity. The investment that they made in the last two years already paid off in the form of a substantial joint venture with Swedish Match and enabled them to bring Zicam to market.
Most start up companies have negative cash flow in their operations until they become profitable. That's why they borrow money and sell stock to build their business. That's what the capital markets are for and that's why companies go public.
The fact of the matter is, "Auric" said "GUMM has not had postive cash flow for over 5 quarters, if ever". This is a false statement, as I proved with the data from Gum Tech's cash flow statements.
Most of the issuance of equity that you mentioned is from the exercise of stock options. This doesn't dilute existing shareholders since earnings are reported as if all outstanding stock options have already been exercised. The only dilution comes in the form of new stock options that are issued, but all companies issue stock options and the dilution is minimal. With less than 10 million shares outstanding, Gum Tech has a lot of earnings leverage. Even if Zicam only captures a very small share of the cold remedy market (1% to 2%), it would have a very positive effect on Gum Tech's earnings.
Do you dispute that nicotine gum and dental gum won't be profitable? If so, where are your projections? Stocks discount the future, and those who know more will win in the long run. If you aren't willing to make projections about the effect of nicotine gum, dental gum, and Gel Tech on Gum Tech, then you don't have any business opining anything about this company's future.
Gum Tech has more cash now then at any time in their history. They have a highly profitable, highly effective cold remedy on the shelf in nearly every store that sells cough and cold products. They have a signed joint venture with Swedish Match that targets the ~$700 million smoking cessation market and an unknown size non-tobacco nicotine market. They are close to signing an agreement with a large consumer products company for dental gum. The only two companies that don't have a dental gum are Colgate and P&G (Crest). Auric's bogus statement that Gum Tech will run out of cash in a year and go bye bye is such bull sh*t that it makes him look like an idiot. They had less cash and higher losses two to three years ago and are still here today.
I really don't think that Auric is an idiot. I think he's a pump and dumper that is in over his head in this stock and is trying to use other shorters like yourself to move the stock down so he can cover. He doesn't even have a very good track record with this stock. The last time he posted on this thread was October 1999, right near the bottom of the trading range, and about three months before the stock rallied 20 points to 36. Stick around for deja vu if you like.
PS: The active ingredient in Brain Gum (PhosphatidylSerine) has been the subject of more than one double-blind placebo-controlled clinical study. It is also sold in tablet form by companies such Natures Bounty and Rexall Sundown. I believe that Brain Gum does enhance brain function, but the product hasn't been a big seller because the distributor, KR Research, hasn't put any money into marketing it. I also think that the name is silly and may actually turn adults off. It sounds more like a gum for kids. IMO, Gum Tech will eventually stop making Brain Gum to focus on more profitable items, higher volume items such as nicotine gum and dental gum. If you are interested in reading more about Brain Gum, go to braingum.com |
