a) | Multistat® cosmeceutical line with BASF – sales have been lagging in recent years, as this product line was absorbed via acquisition. BASF is expanding the formulations they are offering, and QMT is working together with BASF to target new customers. FY13 sales were $330,000. |
b) | NIMBUS® / Bioguard® wound dressings with Derma Sciences under their advanced wound care product line – Derma has been growing strongly in advanced wound care and the segment continues to expand. The Company expects growth from product line expansion, increased sales force commitment (including a dedicated brand manager at Derma), and from international expansion. Sales of BioGuard® gauze dressings were launched in Asia in October 2013. Derma management has publicly stated a 30% expected annual growth rate for their advanced wound care product line. FY13 royalties to QMT were $210,000. If Derma achieves their 30% growth rate, a milestone payment of $300,000 will be due in FY15, in addition to royalties. |
c) | NIMBUS® wound dressings with Viridis: India and abroad – Viridis is producing NIMBUS® gauze for the Indian market, and NIMBUS® foam for India and export markets (expansion currently underway to CIS countries). Projections are for this product line to generate meaningful royalties starting FY14 of $180,000 with double digit growth in subsequent years. |
a) | Stay Fresh® textile based products with Polartec – this contract was signed in 2013, and products are in active development, with initial sales expected early FY15. The Stay Fresh® technology will appear in multiple product lines with Polartec – a second license payment is expected in FY15, with sales income also expected in FY15. Royalties in apparel are lower than medical so the expected royalty potential from this agreement is about half of what is expected from Viridis. |
b) | Pending contract for Stay Fresh® wound dressings with a major distributor – this pending business will be under a compensated joint development agreement (JDA) (FY14) and license fee (FY14/15). Potential income is significantly larger than from the Derma Sciences line. This contract can include several lines of products, further expanding scope of business. |
c) | Pending contract for Stay Fresh® specialty dressing (hydrocolloid) – this is with a manufacturer that has distribution access. A small license fee in FY14, followed by sales in FY15 is expected, with major income (projected over $200,000) for FY16. |
a) | Joint Development agreement for Wound Dressing. Expect $50,000-$75,000 for FY14. |
b) | Department of Defense contract on dressing to reduce scarring and contracture. |
i) | Phase 1 almost completed. Generated 37,000 income FY13 and $113,000 FY14, offset by approximately $40,000 in pass-through costs. |
ii) | Phase 2 can be worth $700,000-$1,000,000 over two years. |
c) | National Science Foundation grant on regenerable antimicrobial coating. |
i) | Phase 1 nearing completion: $150,000 for FY14 |
ii) | Phase 1B is submitted, worth $30,000 from NSF. QMT also has a matching commitment from a corporate partner for $60,000. |
iii) | Phase 2 is pending submission – worth $700,000 to $1,000,000 over 2 years. |
d) | Pending phase 1 submissions: |
i) | Absorbent antimicrobial pads for produce and poultry |
ii) | Improved antimicrobial Foley catheter (urinary catheter). |
· | Total revenue in FY13 was $0.9 million. Based on growth from Derma Sciences, Viridis and BASF, signed R&D contracts and new business FY14 revenue is projected at $1.4 million. |
· | FY13 operating expenses before credits for forfeited option were $1.6 million. Before non-cash options expense, the same level is expected in FY14. |
· | Total decrease in cash in FY13 was $31,000. Adjusting for a one-time payment from Derma Sciences the decrease in cash would have been $1,169,000. We project this to decline to $600,000 in FY14. This is before interest expense which is not included in the projections given the uncertainty of the financing and debt restructuring negotiations. |
· | Revenue growth from signed contracts and new business is projected to continue to increase in FY15 and FY16. To continue to grow the business, QMT will have to make investments in business development ($300,000), R&D ($300,000) and patents ($100,000). The following projections assume these investments start in FY 2015. |
|
Fiscal Year Ended June 30,
|
|||||||||||||||
REVENUE
|
2013
|
2014
|
2015
|
2016
|
||||||||||||
License Fees
|
$
|
276,833
|
$
|
136,417
|
$
|
146,417
|
$
|
148,917
|
||||||||
Royalties
|
283,662
|
510,131
|
1,255,970
|
3,008,711
|
||||||||||||
Sales
|
330,998
|
364,098
|
400,000
|
440,000
|
||||||||||||
Research & Development
|
37,000
|
425,000
|
700,000
|
700,000
|
||||||||||||
Total Revenue
|
928,493
|
1,435,645
|
2,502,387
|
4,297,628
|
||||||||||||
% growth
|
55
|
%
|
74
|
%
|
72
|
%
|
||||||||||
EXPENSES
|
||||||||||||||||
|
||||||||||||||||
Cost of Sales
|
24,983
|
22,670
|
24,906
|
27,397
|
||||||||||||
Research and Development
|
519,836
|
604,836
|
929,836
|
1,294,836
|
||||||||||||
General and Administrative
|
748,933
|
783,925
|
979,780
|
1,296,789
|
||||||||||||
Licensing and Patent
|
255,522
|
255,522
|
305,522
|
365,522
|
||||||||||||
Depreciation and amortization
|
37,024
|
48,474
|
63,474
|
78,474
|
||||||||||||
Options expense (credit)
|
(281,730
|
)
|
200,000
|
120,000
|
140,000
|
|||||||||||
Total operating expenses
|
1,304,568
|
1,915,427
|
2,423,518
|
3,203,018
|
||||||||||||
% increase
|
47
|
%
|
27
|
%
|
32
|
%
|
||||||||||
OPERATING (LOSS) PROFIT
|
(376,075
|
)
|
(479,782
|
)
|
78,869
|
1,094,610
|
||||||||||
% increase
|
NM
|
-116
|
%
|
1288
|
%
|
|||||||||||
Extinguisment payable
|
(160,000
|
)
|
||||||||||||||
Impairment loss
|
58,460
|
|||||||||||||||
Interest income
|
(7,648
|
)
|
||||||||||||||
Interest Expense
|
446,186
|
|||||||||||||||
Total Other Expense
|
336,998
|
0
|
0
|
0
|
||||||||||||
Earnings Before Taxes Interest
|
(713,073
|
)
|
(479,782
|
)
|
78,869
|
1,094,610
|
||||||||||
Taxes
|
0
|
0
|
||||||||||||||
|
||||||||||||||||
Net Income
|
(713,073
|
)
|
(479,782
|
)
|
78,869
|
1,094,610
|
||||||||||
Depreciation and amortization
|
37,024
|
48,474
|
63,474
|
78,474
|
||||||||||||
Stock based compensation
|
(281,730
|
)
|
200,000
|
120,000
|
140,000
|
|||||||||||
Impairment loss on patents
|
58,460
|
|||||||||||||||
Gain extinguishment payable
|
(160,000
|
)
|
||||||||||||||
Unearned revenue amortization
|
1,209,167
|
(136,417
|
)
|
(146,417
|
)
|
(148,917
|
)
|
|||||||||
License receipts
|
100,000
|
25,000
|
0
|
|||||||||||||
DOD/NSF unearned
|
25,000
|
|||||||||||||||
AR
|
(144,460
|
)
|
(101,430
|
)
|
(213,348
|
)
|
(359,048
|
)
|
||||||||
Prepaids
|
(29,471
|
)
|
||||||||||||||
AP
|
(212,186
|
)
|
(150,000
|
)
|
||||||||||||
Accrued expenses
|
(126,915
|
)
|
||||||||||||||
Accrued interest
|
426,132
|
|||||||||||||||
Other Working Capital
|
0
|
|||||||||||||||
Cash from (used in) operations
|
62,948
|
(494,156
|
)
|
(72,422
|
)
|
805,119
|
||||||||||
Non reoccuring
|
0
|
|||||||||||||||
Investing
|
(63,772
|
)
|
(63,772
|
)
|
(63,772
|
)
|
(63,772
|
)
|
||||||||
Financing (net)
|
(30,000
|
)
|
0
|
|||||||||||||
Net (decrease) increase in cash
|
(30,824
|
)
|
(557,928
|
)
|
(136,194
|
)
|
741,347
|
|||||||||
1169000
|
||||||||||||||||
Cash beg of year
|
80,501
|
49,677
|
(508,251
|
)
|
(644,445
|
)
|
||||||||||
Cash end of Year before new funds
|
49,677
|
(508,251
|
)
|
(644,445
|
)
|
96,902
|
||||||||||
Cumulative Cash before new funds
|
NA
|
(557,928
|
)
|
(694,122
|
)
|
47,225
|