Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Phil,
>
>
> 
> Doesn't 47 posts for MMD on Ozestock tend to confirm the point
> Snoopy makes about MMD possibly being "ITC all over again"?  If a
> share is being talked about, and speculated on, to this extent, it
> makes it impossible to estimate how much of the price is due to this
> enthusiasm.  ITC was a hot topic a while ago ; the messages fade
> away along with the share price, or is it the other way around?
> 
> While MMD sounds exciting, and while you are quite clear that it is
> a small investment in the speculative end of your portfolio, I hope
> any others following your lead are as level headed! (or are buying
> for trading rather than "hold for 3-10 years" purposes)  My
> impression is that MMD could well be another ITC, or it could be a
> huge winner ; how one could predict with any precision which of
> those will be the outcome is beyond me.  
> 
>

I can't disagree with anything you've written.

If you go to the MMD website and download the Annual Report you will 
see that this company is burning cash at a rate of around $3m per 
year and had $6m in cash reserves.  

Then if you go to page 22 of the Annual Report:
-----------------------------
(n) Ongoing Operations

"Substantial funds have, and will continue to be allocated to 
research and development projects with some individual programmes 
extending for several years. Considerable effort is being spent in 
expanding marketing and distribution systems for commercial products 
but additional funding or partnering arrangements will be required to 
maintain the current programmes to fulfilment. The revenue generated 
from projects commercialised to date is insufficient to fund the 
ongoing research and development programmes at current levels, 
resulting in the economic entity continuing to record losses. These 
losses, if not reversed or otherwise funded, will eventually deplete 
the economic entity's existing cash reserves."
-------------------------------------

As of last October this company had two years worth of cash left, so 
as I see it the company has a matter of months to bring its heart to 
commercialisation in its present form.  I for one don't think such a 
timetable is realistic.   MMD are going to need to issue huge numbers 
of new shares to keep this project viable, which means existing 
shareholders will have a severely diluted stake.   I don't think it 
is possible to analyse the prospects of such a company in any 
meaningful way from the figures supplied in last years annual 
report.

So I stand by my original comments.   This is classic high risk/high 
return investing.  Sure MMD have successfully commercialised some ECG 
software, but to suggest that this: 

1/ makes the MMD artificial heart a sure winner, and 
2/ MMD has the commercial structure to sell this product through the 
health system in the USA

is IMHO, drawing a very long bow.   This one is for speculative 
investment only. SNOOPY



---------------------------------
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"You can tell me I'm wrong twice, 
but that still only makes me wrong once."


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