It has been a massive few days and I have a lot of information to get out today, so bare with me on this. First up, OBJ announced their September Quarterly Report yesterday. This report has been eagerly anticipated since the announcement of OBJ’s internal pain-patch development program back in the middle of August.
Why? Because developing any form of product costs a significant amount of money and the rate of cash burn can identify if and when a capital raising may be forthcoming.
To analyse the potential effect of the pain patch development program on OBJ I have broken down three key areas of cost; staff costs, research and development and working capital over the last four quarters.
Quarter: | Staff Costs: | R & D: | Other Working Capital: |
Sep 2011 | $66,000 | $305,000 | $197,000 |
June 2011 | $68,000 | $229,000 | $240,000 |
March 2011 | $66,000 | $194,000 | $115,000 |
December 2010 | $75,000 | $197,000 | $123,000 |
From this we can see the following:
· There has been no increase in staff costs.
· Research and Development expenditure has increased from circa $200 - $220,000 to $305,000 this quarter. This could however just be a “one off” result so we will have to wait for another quarter or two to determine if there has been a sustained increase in expenditure here.
· Other Working capital was in the low $100,000’s for the March and December quarter and has recently increased to $200 - $240,000 in the June and September quarter.
So, there has been some increase in Research and Development and Working Capital expenditure, but even if you combine these two items the increase is only circa $200,000 per quarter, which is nowhere near enough to develop an entire product.
This leads me to believe that our costs may be covered by another partner who is looking at the patch in another field of use, or perhaps we have not ramped up our spending in this department yet. If it is the second option, then we will gain further information next quarter and will be able to re-consider our opinion on this issue.
Finally we can see that OBJ finished the quarter with $4,217,000 in cash for a net decrease of $565,000. At this rate OBJ can fund its operations for another 2 years in my opinion. As a result I am happy with their current financial position and where the company appears to be in terms of product development.
No comments:
Post a Comment