Scimitar Equity Blog

ISCO.OB reported a net loss of $2.9M or ($0.04) per share.

ISCO.OB recognized product revenue of $348,984. Costs of sales were $149,573. Marketing expenses were $22,486 with the decrease to a one time reclassification of certain expenses into other income (expense) from sales and marketing. Taking the reclassification into consideration, marketing expenses remained relatively consistent continuing to focus marketing efforts and spend marketing dollars on marketing consultants, trade shows and the cost of advertising. R&D expenses were $714,392. G&A expenses were $2,402,675. The primary reason for the increase relates to headcount additions and expenses related to stock based compensation for options granted to senior management.

• ISCO.OB ended 9/30/10 with cash of $5.97M.

For the 9 months ended 9/30/10 in comparison to the 9 months ending 9/30/09: Product revenue recognized was $1,062,728, compared to $870,770. Costs of sales were $510,279, compared to $741,807. Marketing expenses were $447,480, an increase of $57,914, or 15% compared to $389,566. R&D expenses were $2,052,461, an increase of $420,348, or 26%, compared to $1,632,113. The increase was primarily due to salary expenses related to additional research scientists and our increased research activities. G&A expenses were $5,811,496, an increase of $1,954,768, or 51%, compared to $3,856,728. The increase can be attributed to fund raising efforts during 2010, including an S-1 that was originally filed in 1/10, dividends incurred on Preferred Stock, expenses related to stock based compensation for options granted to senior management and other general corporate expenses. Net cash used in operating activities of $5,521,886 was primarily attributable to a net loss of $7,442,296. The adjustments to reconcile the net loss to net cash used in operating activities primarily include depreciation and amortization expense of $203,816, non-cash compensation expense of $1,545,758, change in market value of warrants of $319,741, stock and warrants issued for services of $970,400, an increase in accounts receivable of $53,807, an increase in inventory of $133,822, an increase in prepaid assets of $47,363, an increase in deposits and other assets of $27,028, an increase in accounts payable of $329,667, a decrease in accrued expenses of $52,175, and a decrease in related party payables of $469,673, attributable to repayments. The major portion of this increase in cash used resulted from increased spending in general and administrative expenses. Net cash used in investing activities of $499,963 was primarily attributable to purchases of property and equipment of $244,786 consisting primarily of laboratory equipment for use in a variety of research projects and building leasehold improvements related to new research labs. In addition, payments for patent licenses were $255,177. Net cash provided by financing activities of $11.3M was primarily attributable to closing a Series E Preferred Stock financing round totaling $2,410,750 and Series F Preferred Stock financing of $7.5M. The Series E Preferred financing was part of an existing agreement to raise %M by issuing Series E Preferred Stock. ISC also raised equity by offering common stock at a discount and have raised $1,33M. In 6/10, closed on a Series F Preferred Stock financing round for $7.5M and issued 1,000 shares of Series F Preferred Stock. As part of this agreement, ISC issued 7.25M shares of common stock which was registered under S-1 at a net exercise price of $1.03 per share.