PR Man Jim Blackman Has Done It Again, Hiding The Ugly Truth Behind Converted Organics Inc. (COIN)
Posted by Timothy Sykes on Sun 14th of Dec, 2008 09:00:34 AM
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I apologize, somehow I missed this now-nearly-month-old beautiful Jim Blackman/Converted Organics press release entitled “Converted Organics Inc. Announces over $1 Million in Revenue“!
Probly because this once highly touted stock is barely above $2 with little hope of recovery, making it irrelevant to my trading strategy.
The PR states:
BOSTON–(BUSINESS WIRE)–Converted Organics Inc. (NASDAQ:COIN) announced today that the Company has filed its Form 10-Q quarterly report with the Securities and Exchange Commission (SEC), announcing revenue of $1,181,423 for the first nine months of 2008, including $428,516 for the third quarter of 2008.
“Converted Organics continues to be pleased with the progress of the Company thus far this year,” said Edward J. Gildea, President of Converted Organics. “We look forward to updating shareholders about plans for the remainder of 2008 and the Company’s opportunities for 2009.”
Considering I’ve always ripped this carcass of a company apart for its lack fo revenues, this should be a good thing, right?
Well, Jim Blackman isn’t a PR master for nothing, let’s take a look at what COIN did to get to that $1 million in revenue, hidden in the nasty 10-Q SEC filing that Blackman is not allowed to touch up:
That’s right kiddies, millions of expenses to get to the $1 million revenue mark….good look with that business model! Here are the details:
We incurred operating expenses of approximately $7.1 million and $2.7 million for the nine months ended September 30, 2008 and 2007, respectively. The principal components of the $4.4 million increase in operating expenses for the nine month period ended September 30, 2008 over the nine month period ended September 30, 2007 is an increase in general and administrative expenses of $3.8 million (due mainly to an increase in salaries of $400,000 for additional personnel, $200,000 in professional fees relating to private placement financing, $150,000 relating to recognition of liquidated damages associated with the private placement financing and $2.3 million recognized as compensation expense upon the issuance of employee stock options as calculated using the black-scholes pricing model), offset by a $193,000 reduction in research and development costs. For the three months ended September 30, 2008 we incurred operating expenses of approximately $1,577,000 as compared to $885,000 for the same period in 2007. The principal components of the $692,000 increase in operating expenses for the three month period ended September 30, 2008 over the three month period ended September 30, 2007 is an increase in general and administrative expenses of $768,000 (due mainly to the addition of personnel and an increase in activity of the Company), offset by a $75,000 reduction in research and development costs.
For the nine months ended September 30, 2008, interest expense was approximately $4.3 million compared to $910,000 for the same nine month period in 2007, this increase is due mainly to original issue discount on private placement financing of $450,000 and amortization of debt discount of $1.7 million. Interest expense increased from $238,000 for the three months ended September 30, 2007 to $1.2 million for the three months ended September 30, 2008, again due to amortization of original issue discount and amortization of debt discount.
For the nine months ended September 30, 2008, net loss was $11.6 million compared to $3.0 million for the same nine month period in 2007. For the three months ended September 30, 2008, net loss was $3.0 million compared to $913,000 for the same three month period in 2007. For both periods, the increases in net loss primarily represent the effects of the increase in our operating costs and interest expense, as discussed above.
Hey, the good news is actual expenses aren’t the majority of that $7 million loss figure, that’s just due to options granting and sketchy sketchy financing deals!
To learn more about Jim Blackman’s incredible PR talents and how you can profit by trading the stocks he works for, check out my PennyStocking Part Deux DVD, it’s 6 hours long and I cover dozens of hype-filled stocks like this.
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