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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: Mark Marcellus who wrote (2738)	10/23/2000 1:36:42 AM
From: DanZ	Read Replies (3) \| Respond to of 5582

That's not a healthy way to look at a development stage company? I tell you what, Mark. Pretend you are the CEO of Gum Tech. The company needs money to bring three new products to market that are important to the future of the company (Zicam, nicotine gum, and dental gum). Do you: a. Issue debt b. Issue equity c. Sit on your ass and do nothing because issuing debt and equity aren't a healthy way to look at a development stage company. If your answer is c and I was on the Board of Directors, I'd fire you in a heart beat. How can you criticize a company for borrowing money and issuing stock to raise capital when they clearly made good use of the funds? It isn't like they borrowed money and pissed it away. How do you expect a development stage company to bring new products to market so they will grow out of the development stage? Do you have any idea how much the joint venture with Swedish Match is worth in terms of future sales growth and profitability? Do you have any idea how much Gel Tech is worth in terms of future sales growth and profitability? Do you have any idea how much a partnership with Colgate and/or Procter & Gamble would be worth in terms of future sales growth and profitability? The money that they borrowed (and already paid back) was put to very good use. Your claim that my comments on cash flow are misleading is hilarious when I clearly separated operating cash flows from investing and financing cash flows. I didn't hide a thing. Auric's statement was misleading because you have to look at a company's TOTAL cash flow, not just the component of cash flow that supports your position. I agree with you that cash burn is important, but it is very misleading to imply that Gum Tech will run out of cash in one year even if they burn $1 million a quarter and have $3.5 million in cash. First, this assumes that they won't have positive cash flow from operations over the next year which I disagree with. Second, it assumes that they won't raise money if needed through a debt offering similar to the one with Citadel. Third, it assumes that they won't raise money as a result of the exercise of options which is completely wrong. Fourth, it assumes that they will burn $1 million each quarter which I disagree with. I'll say it again: Using Auric's logic, a whole slew of companies that have thriving businesses today would have been out of business years ago. You have to evaluate what is coming down the pipe, not what happened two, three, and four years ago.