Scimitar Equity Blog

FY10 net loss of $23.5M or $0.456 per share

Revenues were $69.8M minus $49.6M cost of revenues with a gross profit of $20.1M. Revenues for 2010 were comprised of pharmaceutical product sales and $237K related to stem cell collections, cell therapy services, license fees and royalties. The increase in pharmaceutical product sales in 2010 was due to Erye being included in the results of operations for a full year in 2010. Cost of revenues was comprised of $49.6M related to pharmaceutical product sales, and $28.9K of direct costs related to collecting autologous stem cells from clients and providing cell therapy services. Gross margin was $20.15M. The sale of pharmaceutical products accounted for 99% of gross margin in FY10.  R&D costs were $7.84M. SG&A expense logged in at $31.3M. Historically, to minimize use of cash, NBS has used a variety of equity and equity-linked instruments to pay for services and to incentivize employees, consultants and other service providers. The use of these instruments has resulted in significant charges to the results of operations. In general, these equity and equity-linked instruments were used to pay for employee and consultant compensation, director fees, marketing services, investor relations and other activities. For FY10, the use of equity and equity-linked instruments to pay for such expenses resulted in charges to SG&A and R&D expenses totaled $7.376M. The operating loss for FY10 was $18.8M. Other income ($513K) minus interest expense minus $480.9K generated $32k. Included in other income and expense in FY10 was other income of $656K due to a settlement agreement reached with a business partner involved in the development of the platform research organization in China, whereby the business partner relinquished rights to certain shares of common stock. NBS valued the shares at their fair market value on the day the shares were relinquished. Also included in other income and expense in 2010 was $138K in expense for fair value adjustments on derivative liabilities related to the Series E Preferred Stock issuance in 11/10 and other outstanding warrants. Included in interest expense in 2010 was $281K in amortization of preferred stock discount and issuance costs related to the Series E Preferred Stock. NBS owns a 51% interest in Suzhou Erye Pharmaceutical Company Ltd. (Erye). NBS accounts for the 49% minority shareholders’ share of Erye’s net income with a charge to net income attributable to non-controlling interests. For FY10, Erye’s minority shareholders’ share of net income totaled $3.9M. Net cash used in operating activities plus net cash in investing activities were $17.1M generating net cash provided by financing activities of $33.85M. The net loss of $19.39M plus net income attributable to non-controlling interests of $3.9M, preferred dividends of $237.9K generated a net loss attributable to shareholders of $23.54M based on 51.63M shares.

• Cash and cash equivalents at 12/31/10 was $15.6M