Hmmmm.....Well, that sounds like it COULD be the explanation...but it only makes sense if the path to positive cash flow is either difficult to see - or non-existent. I don't think either really applies here.
The net loss for Q3 was 3,945,836. Of that, however, 3,991,339 was non-cash expenses that has absolutely nothing to do with "real" cash flow (3,553,023 for amortization of stock given to Arnold, management, and directors; 178,316 for depreciation; and 260,000 for "non-cash legal settlement expense". There was also a non-cash "legal fee accrual" for 250,000. This is a little different as this may / probably will turn into a "real" cash expense at some point. Back out the 3,991,339 portion of th e non-cash expenses and you arrive at postive cash flow of 45,503.
They also had "Total other income" of $926,944. Some portion of this - possibly all - is non-cash income that ALSO has absolutely nothing to do with "real" cash flow. If it is all non-cash income, then we're at negative cash flow of roughly $875,000.
There was a one-time hit of $1.88M in additional discounts and sales allowances to close out the old Assault product line, and advertising was by by $0.77M over Q2. The sum of these two items is $2.65M. The Assault discounts will presumably be absent in Q4, and MSLP obviously chooses what to spend on advertising. Meanwhile, sales will presumably be up by several million in Q4 due to Arnold and Costco. And by several million in Q1 due to Walgreens. So it's not like the path to positive cash flow is incredibly obvious.
Insiders just got done saying how this company is UNDERVALUED! If there are any Form 4s, itll be PURCHASES and not sells.
Because the company is bleeding money. Until they get expenses under control and show a path to positive cash flow, investors will wait.
Sometimes when they have limited time scheduled for the call, they will give preference to analysts and people representing big money. I don't see anything wrong with this, but I was not waiting to ask a question.
The real advantage is that it gives people something to complain about, and offer support to those who want to promote conspiracy theories about management.
This is how they finished the call:
"Guys, thank you very much for all your comments. And I hope we provided you the valid responses that you need. If by any chance there is anything else, we've emptied the queue on questions, but if there is anything else that comes up, you know how to reach us through Bob or directly. We'd be happy to continue to answer the question. So this is a partnership that we want to continue to develop and grow, so we want to make sure that we share everything we can with you."
Instead of posting here, why not call and ask them your questions?
I have been involved within the financial services industry for a long time. I know this happens, but the conference call questions appear to have been pre-screened. I was in queue, as is often the case, I didn't get my turn, however I look through these questions and the advisors listed and I'm under the impression they took no outside calls. I hope I'm wrong, and if you are one of the advisors please reply to this post, but it doesn't look good on the conspiracy theory front....
Compensation is the killer for shareholder confidence. It is a growth company operating at a loss and they are paying themselves as if they "made it". Too many corners to turn before they can/should get paid as much as they are. I've been a believer for a long time.
The article was very well written. I think it makes sense for the MSLP to be operating at a loss, given the infancy of the company. I prefer that the company continues to spend money on marketing to get their product on the shelf and to create a reputable brand name. However, by continuing to operate at a loss, MSLP is sacrificing the trust of its shareholders.
near term and enhance the future growth path as outlined in the SA article. BZNE shareholders will benefit as BZNE would not have had the opportunity to expand or sell itself into the secondary market to the degree which the Board of BZNE is attempting to accomplish in increasing shareholder value.