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Arrhythmia Research Technology Inc. Message Board

  • hrthrt97 hrthrt97 Apr 10, 2013 9:41 AM Flag

    Three questions

    So a quick poll as we hit 10 days past the filing deadline. As always would welcome guesses from others.

    1). Will they file by April 15th?

    2). Will operating earnings be positive?

    3) Will McGladrey qualify its opinion based on a going concern issue?

    My guesses: yes, no, yes.

    Would welcome other opinions/points of view

    Best,

    H

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    • 1. yes 2.no 3.no. The company closed its new financing on what i would consider favorable terms. Whether the opinion is qualified or not does not matter IMO as long as they got the new loan package. I'd expect the hit from the former CEO's severance package to be between $100K and $150K pretax and I would view it as non-operating (not sure if the accountants will separate it out as a non-operating charge even if it is non-recurring). I'd still expect them to lose a little money even excluding that charge as the cost savings from winding down Wireless Dx probably have not hit their full run-rate on a quarterly basis yet. I do think the results will not be very far from operating (i.e., EBIT) break-even.

      More interesting is that a large holder (fund) appears to be in the process of liquidating its stake today. It can only be one of about three possible entities. Looks like they will be happy to let it go near $2.70 per share. That is a positive, any time you winnow an overhanging position.I'm from Missouri on this one until I see what the new CEO proposes/delivers, but insolvency is clearly off the table (near or intermediate term) IMO.

      • 2 Replies to roboklerk
      • Renaissance, Dimensional or Fidelity?

      • One can only guess as to the new lender's thinking, here's mine 1. They needed to see Wireless Dx dissolved thus no longer impacting the company 2. They needed to see the change in management at the highest level 3. They probably saw both near term pro forma results and longer term scenario forecasts of positive EBITDA and decent EBITDA coverage of interest and (further down the line) principal repayment w/which they felt comfortable in a slow or perhaps even no growth economy. Not sure how hard they would have drilled down on execution risk, and that is always a tricky qualitative process. I suppose you don't lend the money if you are not comfortable w/the new leadership. Then again they have a claim on the company's assets and patients are also going to need ECG sensors.

 
HRT
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