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| BCRA.OB > SEC Filings for BCRA.OB > Form 10-Q on 13-Aug-2009 | All Recent SEC Filings |
13-Aug-2009
Quarterly Report
In this quarterly report, we include some forward-looking statements that involve substantial risks and uncertainties and other factors that may cause our operational and financial activity and results to differ from those expressed or implied by these forward-looking statements. In many cases, you can identify these statements by forward-looking words such as "may," "expect," "anticipate," "believe," "estimate," "plan," "intend" and "continue," or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial condition, or state other "forward-looking" information.
You should not place undue reliance on these forward-looking statements. The section captioned "Management's Discussion and Analysis of Financial Condition and Plan of Operations," as well as any cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from our expectations.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Because of the risks and uncertainties, the forward-looking events and circumstances discussed in this quarterly report might not occur.
You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the unaudited condensed consolidated financial statements and the related notes that appear elsewhere in this report and in conjunction with our discussion and analysis in our audited annual report on Form 10-K for the year ended December 31, 2008 which we filed on March 31, 2009.
This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, property and equipment, stock based compensation and contingencies. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The assumptions and bases for estimates used in preparing our condensed consolidated financial statements are set forth as significant accounting policies in Note 3 of the notes to the condensed consolidated financial statements included in this quarterly report and are summarized below:
Intangible Assets. Intangible assets consist primarily of developed technology and patents (developed and purchased), trademarks, trade names and customer relationships. Intangible assets with an indefinite life, including certain trademarks and trade names, are not amortized. The useful life of indefinite life intangible assets is assessed annually to determine whether events and circumstances continue to support an indefinite life. Amortization is computed using the straight-line method over the estimated period of benefit. The valuation of these intangible assets is based upon estimates as to the current value of each patent and the period of benefit and such estimates are subject to fluctuations. The value of a particular patent could fluctuate based upon factors, such as competing technology or the creation of new applications, which are not accounted for in making, but could affect, the estimates used.
We owned through our wholly-owned subsidiary twelve additional patent titles, covering our technologies which have been granted by various countries official government patent office, including most European Union countries, Canada, Australia, and Japan and in the United States by the US Department of Commerce Patent and Trademark Office. The cost of acquisition, expenses incurred on most of our approved patents and on the successful defenses of most of these patents are fully amortized in our subsidiary financial statement and are not included in Intangible Assets in our financial statement.
Allowance for Doubtful Accounts. We estimate uncollectibility of trade accounts receivable by analyzing historical bad debts, customer concentrations, customer creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. We consider these factors to be the best available indicators of the likelihood of collection of trade accounts receivable. However, they are subject to uncertainty, and collectibility cannot be precisely determined.
Results of Operations for the Six Months Ended June 30, 2009 Compared to the Six Months Ended June 30, 2008.
As discussed below, our operations are conducted outside the United States of America. The functional currency of our French subsidiaries is the Euro and not the US Dollar. However, our financial statements, as well as the following discussion regarding our results of operations are expressed in U.S. dollars. Accordingly, part of the variance in revenues and expenses discussed below is due to the fluctuating exchange rates in addition to the other factors discussed.
Net sales, which are solely attributable to our wholly-owned French subsidiary, totalled approximately $228,000 for the six months ended June 30, 2009, a decrease of approximately $94,700, or 29.3% from approximately $322,700 for the six months ended June 30, 2008. The net sales in Euros totalled approximately €170,400 for the six months ended June 30, 2009, a decrease of approximately €38,500, or 18.4%, from approximately €208,900 for the six months ended June 30, 2008. This decrease is attributable to a decrease in sales of products in the neurosurgery area in export and is partially due to the fluctuating exchange rates between Euro and US Dollar.
Cost of sales was approximately $62,700 for the six months ended June 30, 2009, a decrease of approximately $148,100, or 70%, from approximately $210,800 for the six months ended June 30, 2008. The gross profit percentage for the six months ended June 30, 2009 and 2008 was approximately $165,300 or 72% and $111,800 or 35%, respectively. The increase in our gross margin during the six months ended June 30, 2009 compared to the six months ended June 30, 2008 was primarily due to the sale of higher margin products in 2009 compared to 2008.
Research and development expenses were approximately $17,700 for the six months ended June 30, 2009, a decrease of approximately $17,600, or 49%, from approximately $35,300 for the six months ended June 30, 2008. This decrease is principally due to decrease of our research and development activities in the six months ended June 30, 2009 relating to our development of a new generation of products.
Consulting and professional fees were approximately $105,700 for the six months ended June 30, 2009, a decrease of approximately $9,100, or 8% from approximately $114,800 for the six months ended June 30, 2008. This decrease is principally due to the decrease in various professional fees.
Administrative expenses were approximately $166,300 for the six months ended June 30, 2009, a decrease of approximately $8,700 or 6%, from approximately $157,600 for the six months ended June 30, 2008. This decrease is primarily attributable to lower administrative compensation in 2009 compared to 2008.
Total other income (expense) was an expense of approximately $(113,700) for the six months ended June 30, 2009, an increase of approximately $3,800, or 3.5%, from an expense of approximately $(109,900) for the six months ended June 30, 2008. This increase resulted primarily from an increase in interest expense.
As a result of the above, our net loss for the six months ended June 30, 2009 totalled approximately $282,300 or $.02 per share compared to a net loss of approximately $360,300 or $.03 per share for the six months ended June 30, 2008. These losses per share were based on weighted average common shares outstanding of 11,443,787 and 11,399,287 for the six months ended June 30, 2009 and 2008 respectively.
Results of Operation for the Three Months Ended June 30, 2009 Compared to the Three Months Ended June 30, 2008
Net sales, which are solely attributable to our wholly-owned French subsidiary, totalled approximately $112,700 for the three months ended June 30, 2009, a decrease of approximately $60,700 or 35%, from approximately $173,400 for the three months ended June 30, 2008. This decrease is mainly attributable to a decrease in sales of products in the neurosurgery area in export during the second quarter 2009 and is partially due to the fluctuating exchange rates between Euro and US Dollar.
Cost of sales was approximately $25,800 for the three months ended June 30, 2009, a decrease of approximately $68,600 or 73%, from approximately $94,400 for the three months ended June 30, 2008. The gross profit percentage for the three months ended June 30, 2009 and 2008 was approximately $86,800 or 77% and $78,900 or 45%, respectively. The increase in our gross margin during the three months ended June 30, 2009 compared to the three months ended June 30, 2008 was primarily due to the sale of higher margin products in 2009 compared to 2008.
Research and development expenses were approximately $4,300 for the three months ended June 30, 2009, a decrease of approximately $14,900 or 78% from approximately $19,200 for the three months ended June 30, 2008. This decrease is principally due to decrease of our research and development activities in the three months ended June 30, 2009 relating to our development of a new generation of products and partially due to the fluctuating exchange rates between Euro and US Dollar.
Consulting and professional fees were approximately $46,500 for the three months ended June 30, 2009, a decrease of approximately $700 or 1.5%, from approximately $47,200 for the three months ended June 30, 2008. This decrease is principally due to a decrease in general overhead.
Administrative expenses were approximately $88,600 for the three months ended June 30, 2009, an increase of approximately $17,800, or 25%, from approximately $70,800 for the three months ended June 30, 2008. This increase was primarily due to an increase in various administrative expenses and secondly due to the fluctuating exchange rates between Euro and US Dollar.
Total other income (expense) was a net expense of approximately $(64,400) for the three months ended June 30, 2009; an increase of approximately $9,700, or 18%, from an expense of approximately $(54,700) for the three months ended June 30, 2008. This increase is due to the fluctuating exchange rates between Euro and US Dollar.
As a result of the above, our net loss for the three months ended June 30, 2009 totalled approximately $139,300 or $.01 per share, compared to a net loss of approximately $149,200 or $.01 per share for the three months ended June 30, 2008. These losses per share were based on weighted average common shares outstanding of 11,443,787for the three months ended June 30, 2009 and 2008.
As shown in the accompanying condensed consolidated financial statements, we had net losses of approximately $282,300 and $360,300 for the six months ended June 30, 2009 and 2008, respectively. Management believes that it is likely that we will continue to incur net losses through the end of 2009. We had a working capital deficiency of approximately $1,465,000 and $1,066,000 at June 30, 2009 and 2008 respectively. We also had a stockholders' deficiency of approximately $3,841,000 and $3,319,600 at June 30, 2009 and 2008 respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company will need additional working capital and plans to pursue strategic alliances with well capitalized entities to improve its financial condition. Also the Company will seek additional financing from prospective investors as it has successfully done in years 2008, 2007, 2006 and prior years. However, there is no assurance that it will be successful in accomplishing these objectives. In addition, in March 2008, the Company received a written confirmation from an "accredited investor" indicating the investor's intent to provide the Company with funds of up to $250,000. Through June 30, 2009, the Company has received a total of $218,500 of such funds (Note 6). Management believes that these funds, together with the funds to be raised from the efforts described above, will provide sufficient working capital to operate through 2009.
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