E-mail from FASJust received the following e-mail:
Dear Friends,
I am sorry that the QI financials went out without comment. They were filed
in my absence from EY Canada because we had reached the filing deadline. A
PR has now been released and an update on things in general is attached.
There is no macarbre reason for my silence - merely the absence of a longer
day and more days in a week!
Regards, Tony Nicholls
Attachment is a word document.
This is the content of the attachment:
Dear Friends
I know from the volume of mail that has hit our e-mail address that a number of you are concerned about the Company and I will try to address those concerns below. I do understand the share price concern but perhaps I should again remind you that the management, directors and their families and close friends hold over 18 million shares in FAS and have a rather acute interest in the fortunes of the stock! I should also like to point out that vast majority of shares have not changed hands since the day they were acquired. Thus the fortunes of the stock are, most probably, in the hands of those who have acquired for short-term gains rather than for any real long-term interest in our Company. We can only hope that "mopping up" by shareholders with genuine interest will eventually dilute the effect that these "players" have on the stock.
Fortunately, everyone employed by the Company is in for the long haul and it is my job to make sure that their focus is on the Company's progress rather than on the stock price. As you will be aware we have made additions to our staff in recent weeks and have still to add more within the next couple of weeks. We are seeing a massive increase in activity and workload on the ground - indeed, this week is the first I have been in the office for two consecutive days since Christmas - and that's only because I have been able to send Dr Dark to meetings today and tomorrow in my place. Wednesday through Friday I will be in Italy doing more training.
To answer some of the concerns voiced directly - and eloquently - by our regular "correspondents":
Sales are not decreasing but increasing. Last year's revenues included a significant sum from license revenues, of which there have been none this year. Actual unit sales are already at 73% of last year's total, with Q1 2001 FAS Endoluminal Brush sales being some 97% up on Q1 2000. We have experienced some production delays due to flooding in Lewes where our product is made. Fortunately the factory itself escaped damage but many staff had difficulties getting to work. We are about six weeks behind our production plan but catching up daily. We do have three distributors on back-order.
As a consequence of our forecast exceeding our contract manufacturer's current capacity we are in the process of setting up two additional manufacturing sub-contractors. We expect these to be on-line in July and September respectively. At this point we will have the capacity to meet our forecast demand through the end of 2002. We will be constantly reviewing the situation to make sure we are not constrained by supply.
We are aware that there is concern with regard to our financial position. We have always managed our money tightly. We do not see this situation changing dramatically in the short-term. It is not in anyone's interest - or on any "internal agenda" (as has been suggested) - to allow the Company to fail in this, our growth phase, as a result of lack of finance. Indeed you will see from last year's financials that there was a mere $1500 difference between our opening and closing cash position.
To those who have suggested that 140 days is a long time to get the year end financials I would have to agree. To suggest, however, that the Company does not know its sales levels on a daily basis is naïve. Our audit process requires that first our UK accountants sign off on their year end figures, then that our Canadian auditor actually visits our UK office and conducts its own audit, then that both parties agree and finally that both parties agree on the currency exchange figures. You will appreciate that we are not top of anyone's agenda and that it takes inordinate amounts of time (and expense) to get this all co-ordinated.
I am pleased to report that scientists in Brazil have published results of a great success with the Brush in a child undergoing peritoneal dialysis. Their letter is published in Peritoneal Dialysis International, December 2000, page 805: Ana Figueiredo, Tettamanzy F, Vercoza AMT and Poli de Figueiredo, CE of the Hospital Sao Lucas, Ponfificia Universidade Catolica do RS, Porto Alegre are the authors. When I met Ana in New Orleans she told me that there had been a great deal of interest in their findings. They have invited me to give a Guest presentation at the renal conference in April. I hope to accept but am looking at severe "calendar congestion" at that time.
Dr Ralph Hawkins and I attended the 21st Dialysis conference in New Orleans. A total of 3400 delegates were registered. Ralph presented in the "Industry Speaks" Session. FAS was first on ahead of Fresenius (new Optiflux dialyser), Minntech (reprocessing germicides), AKSYS (Personal Dialysis System), Kendall (Presternal Catheter), Vasca (LifeSite) and BioLink (DiaLock).
Ralph's talk was attended by 213 people - the highest attendance for all Industry presentations. He drew several favourable comments on his presentation - which was first class. 42 people left the session following the presentation and were clearly only present to hear about the Brush. Four Gambro Managers, Frances McCarthy (CardioMed), Alberto de Miceli (Medival) and Henk Hak (Medihac) were there from our distributors. MedComp, who could not release anyone from stand duty to attend the talk, had a booth and activity in the afternoon following Ralph's presentation was "brisk". As an unexpected bonus, Leslie Dinwiddie (Uni North Carolina, Chapel Hill) who is an editor of the ANNA journal, mentioned the Brush in both of her presentations and is genuinely interested in seeing it introduced into the USA.
Interestingly, the major issue with regard to the use of the Brush in the USA appears to be reimbursement rather than the lack of FDA approval for patency. Apparently infection is of growing concern and loss of access is becoming critical. Incidentally, the use of TPA to clear lines - the method which seems to be most prevalent - is also waiting FDA approval. We have undertaken a new programme to seek a specific reimbursement code along side our efforts to broaden our regulatory scope.
Concern has been expressed that we need CE re-registration this year and that failure to get it could jeopardise European Sales. We are confident that we will get re-registration - we have passed all other audits without any citations and our systems are becoming stronger rather than weaker. We are working towards broadening the scope of our registration in July to include classification under 9001 rather than 9002 so that we will be approved for design and development of new products. TuV have agreed that we can use the Rapid Test development programme to show adherence to these additional standards.
I hope these notes will assure you that we remain confident in our business and our future. As in all endeavours nothing goes quite as quickly as we would all hope but we have suffered no reversals of fortune that would make us nervous about the validity of our objectives. We expect that our increase in staff will lead to our ability to increase our efforts to tackle the workload and to give greater focus to the commercial rather than organisational side of the business. Personally I am looking forward to a year that will be a deal less stressful than the previous seven - if not any less hectic.
Kind regards,
Tony Nicholls.