BLT - Blis Technologies

[fungus pudding]

Sales did actually grow, although not by much. But they certainly didn't collapse, and the reduced income was because of the reduced contract work, not sales revenue. US sales did increase from 760k to 976k. Nevertheless, "expectations have moderated in terms of how quickly volumes can build to commercial levels." (p5)

It's same store sales that matter. How did they go? e.g. a doubling of sales by doubling the number of outlets is not growth in this stage of a product's life cycle.

[blissfool]

I tend to agree with you simila, extremely dissappointing result (perhaps now on the edge of the precepise) however sales growth and product development is positive, especially the new animal product. I think and hope this could be dairy based, with Barry's previous dairy connections, the relationship between Nestle and Bliss plus the relationship between Nestle and Fonterra. As well as the fact that probiotics have a strong dairy assocation, I think the new product may be the one to watch. It would be ironic that a company who's foundation was built on providing products for humans turned itself around with a product suitable for cows.

[winner69]

And they sneak the result out under cover of darkness. Loss 1.4 Mil. Over the 12 months they have burnt through half their remaining cash and have about 1.5 Mil. left.

The usual excuse for late Friday afternnon announcements is that they had to finish the Board meeting off to OK the results and this dind't finish until 5pm .... yeah right

These guys are pulling the wool over your eyes .... and as long as they produce pages and pages of good news and you fall for the good old one off expense story and that dividends to the prefferred few shouldn't really be shown because it is really equity than no doubt all is OK and the future will be wonderful .... thse things are called cash burn and do matter

I look at it this way .... all this wonderful stuff and all they can sell is $35,000 a day of it .... maybe the local Four Square should do a IPO

[simla]

Yes you're right, Winner69, in that although one-off expenses and non-p&l pref dividends are worth excluding to see underlying performance and ratios, yet definitely they are no long term solution. We are obviously all hoping for sales revenues to dwarf those sort of issues. The company is saying the same when it talks of reaching "commercial sales volumes". And the one-up expansion costs are likely to continue for some time anyway, as the company obviously intends to push on.

There is no disputing that the issue is whether this product will sell in much larger quantities. That's the big question that each investor must form their own opinion on. The company's opinion on the subject is clear at least: "Our partners have invested considerable funds in developing and marketing products based on our branded ingredients and share our expectations for achieving commercial sales volumes in the near future." (p13)

(For those who still want to use that view though, you might rejig page 3 to read: underlying operating loss 286k, one-up GRAS costs 248k, Amortisation/Depreciation (non-cash expense) 330k, Pref Div costs 521k = 1385k loss. In this respect, the company's underlying operating loss is roughly the same as last year (a bit bigger due to reduced research contracts absorbing a little less of research costs maybe?), whereas the div costs went up due to the extra $1m prefs. Since sales this year were vaguely the same as last year, it's not surprising the underlying operating loss should be about the same too.)

As to cash burn, which always definitely matters, one of the biggest parts of the cash burn seems to be the R&D, and that's really a fascinating thing. Clearly the company would have an easier life without that, so you have to conclude they're pretty happy about all this R&D they keep capitalising. And don't forget that the auditors are happy to sign off on this expenditure being something they can use to make a profit with later, as required by accounting standards (p25). I think we ignore this large part of the company's activities here, but I find it hard to see it as not of significance.

[simla]

As far as the next product is concerned, I think the company has drummed on about GRAS for long enough for us to think that they have high hopes there.

You only have to look at how many people are standing inside vitamin stores when you walk past (basically none whenever I'm looking) versus supermarkets (never empty, often packed) to see why GRAS is the preferred route of many companies, and therefore why this company might hope that GRAS will generate sales faster than dietary supplements. Personally, I can see quite a bit to be hopeful of if the company can already put Blis into yoghurt and ice cream (as I read p12) and is shortly to have permission to sell those if GRAS is about to arrive (p8) and is in talks with several food companies (p11).

[simla]

These guys are pulling the wool over your eyes .... and as long as they produce pages and pages of good news and you fall for the good old one off expense story and that dividends to the prefferred few shouldn't really be shown because it is really equity than no doubt all is OK and the future will be wonderful .... thse things are called cash burn and do matter

The reason I don't see it that way myself is that this is a gutsy company that keeps achieving things. You see companies that just keep doing the same thing every year and not gaining much from it. But this company is always diligently pursuing deliberate choices with a specific end in mind. For example, for Blis to have battled through the extraordinarily difficult probiotics regulations regime to gain GRAS is hugely impressive. Everybody's trying to do it, but Blis did it. (If they have! But it sounds like they probably have.) And there are many achievements like that under their belt now.

Don't forget the rights issue was only 24 months ago. They've made a huge amount of progress in that time.

Investors looking at the current situation - me, anyway - surely can't help noticing two main points. (1) Sales revenue needs to grow a lot to be a useful long term investment. (2) This is a seriously talented company selling excellent products which has already moved mountains and is still working hard.

It's the oddest thing, considering they just announced a 1.4m loss, but that report left me feeling more confident than before. I just got this feeling that a point of critical mass had been achieved. If the GRAS is confirmed, I might even return to feeling "optimistic", instead of the "cautious" I have been for most of the last year.

However, I can't read the future any more than anyone else can, and that's just my views. Each will have their own ideas, naturally.

[Nigel]

Will be interesting to see what the share-price does in the morning!

[winner69]

Will be interesting to see what the share-price does in the morning!

Prob go up seeing things weren't so bad ... or less worse than many thought

[fungus pudding]

Prob go up seeing things weren't so bad ... or less worse than many thought

Which is much better than more badder.

[Bobby_Fischer]

"... the Company ... is soon to complete [GRAS]". p8. "June 2011" expected (p8). Next month?

I don't read it the way you do, Simla. My reading is that the process is simply delayed until June 2011 ("... has delayed this process to June 2011"). That may or may not mean that they will make a submission to the FDA in June. Even then I think I read somewhere on the FDA website that the FDA only aims to respond to GRAS requests within 6 months. Presumably it could take longer than that if there were issues. Potentially still a long row to hoe with GRAS methinks. Keep a watch here: http://www.accessdata.fda.gov/script...pt=grasListing