Upon further review.....First of all Scan, if you read the MD&A, it clearly says the clinical trials with Nestle and Yoplait are finished, and that results are expected by the end of third quarter (which is Nov 30th). Clearly that portion of the approval is outside of management"s control, and Tina definitely expressed frustration yesterday at having to wait through that bureaucratic process.
Secondly, I have warmed up to the sales price decrease issue. Lets face it, we all saw that writing on the wall over the last year, with constant discussions at how Arctic Wonder was more expensive than alternative products. But here is the good news. They produced and shipped 53% more product, and kept gross margins above 50% (but down from 58% in Q2 2010). I am way more excited about the production efficiency gains which are driving down production costs. We knew retail pricing had to come down, especially if we were looking for a mass market penetration. Lets face it, if you want to sell large quantities in Walmart, Walgreens and Costco, you have be priced right. We know the mass market is now right at their doorstep, and so I see the production costing gains as way more important at this stage, then pricing erosion. Oh yeah, and by the way, they just signed a deal with a Chinese manufacturer/distributer JV. It all ties together. There is a long history of innovative new product that comes out expensive, and falls in price as the mass market is penetrated (have you bought a flat screen TV lately?). If they can keep gross margins at 50% and keep increasing sales exponentially, together with enforcement of their patents, sounds like a burgeoning success story to me.
As for the quarterly results, $1.8M loss for the quarter, which includes $1.5M in R&D at Acasti, and $900K in a share price increase stock option accrual (which is non-cash). So, I'd call it a profitable quarter, with only $4.5M in sales.
Oh, and if you are fussed with the $1.5M in Acasti R&D. The market cap in Acasti has gone from $35M (at
.60) to $75M (at $1.25) going to $120M (at $2.00 a share). I think you get a pretty good multiplier in value-creation with the R&D costs.
Yeah, management needs some work, but the scienctific and market story here continues to be very compelling.