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| From: | "Cristine Kerr" <criskerr@optusnet.com.au> |
| Date: | Mon, 3 May 2004 09:52:48 +1000 |
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Visiomed released their Jan-Mar
2004 Qtrly Report last Friday and I've had an opportunity to
read and summarise this morning:
Receipts from customers were $117,000 for the
quarter. I was hoping for higher revenue for Siemens equipment, however, in view
of Visiomed only having the rights since mid last November, this result was not
unexpected.
Expenditure ($611,000) is a little down compared to
average expenditure ($660,500) for the first two quarters. Long-term cash
position is an issue with $887,000 (sufficient to fund just over 4
months at current rate of cash burn. Visiomed have provided details
of *additional funds received and anticipated for this quarter (see
Item 5 below), have stated a commitment to further reducing expenditure, and
have provided information on some very promising potential earnings sources
(refer page 7 of the report which I have summarized at Items 1-6
below):
1) Negotiations for the sale or licensing of the
Funhaler business and patent portfolio to USA interests are progressing
well.
2) A number of parties have expressed an interest
in participating in a placement in the Company. Although no specific proposal is
being considered at this time, directors have in place a plan to raise
funds to ensure the Company has the working capital required for its
operations depending on the timing of the sale of the
Funhaler.
3) The first cash proceeds from the Visiomed
Imaging radiography equipment distribution business will be received in the June
2004 quarter.
4) Significant expenditure has been incurred during
this quarter on the FDA approval process and payments to US consultants advising
on the proposed Funhaler sale. These costs are not of a recurring nature.
Expenditure has been substantially in accordance with the Company's anticipated
expenses.
5) The company has received *further grant
funding of $52,000 since the end of the quarter and *expects to
additionally receive approximately $130,000 being proceeds from the sale of the
Boorara tenements and tax R&D rebates.
6) The Company monitors its cash position very
closely and is taking steps to ensure that there are sufficient funds to meet
working capital and other requirements. The Company also expects a significant
reduction in operating costs as a result of the implementation of a planned
restructuring of operational activities.
Personal observation:
Re Item 5 - grant funding will increase
Visiomed's cash position to $939,000 and with Boorara a cash position
of $1,069,000. Payments to US consultants will decrease
- Visiomed states this is non-recurring expenditure - i.e.;
Expenditure of $611,000 less Consulting Fees $83,000 = Anticipated expenditure
of $528,000 per subsequent quarter, however; it is unclear if payments to
consultants will cease or scale down gradually this quarter.
At current cash burn rate = sufficient to fund
over 5 months and depending on speed of reduction for
Consulting Fees - sufficient to fund 6-7 months. (NB May be
other cost containment areas being explored by Visiomed as well.)
Other factors for consideration:
. If Visiomed succeed in their commitment to reduce
expenditure this time frame would be extended though by how much is
unknown.
. Prospect of income resulting from sale or
licence of Funhaler in the near future is looking very
promising.
. VSG will be receiving their first cash proceeds
from Imaging distribution business this quarter - refer Item 3 - however, the
potential $ are unknown.
All in all, to me, Visiomed's cash position looks OK for at
least six months. I'm expecting Funhaler to be secured soon. If that
doesn't happen, I'd be personally pleased to see a Capital
Raising following approval of Visiomed's 1st FDA submission for Microderm
as this is likely to be a catalyst for SP growth.
Regards,
Cris
NB Recent comment by Citgroup re Biotech sector: "While we expect a more
muted sector sentiment over 2004, we do believe that positive stock specific
news will be rewarded," Citigroup said.
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