.comment-link {margin-left:.6em;}

Saturday, September 30, 2006

Procyon Corp (PCYN)

PCYN (sec, yahoo)
Reverse merger into Amerx Health Care Corp (based in Clearwater, FL) which develops and sells proprietary medical products: treating pressure ulcers, dermatitis, inflamation, skin problems. Sales are through distributors and institutions. They also do direct mail-order to diabetic Medicare customers via Sirius Medical Supply subsidiary (currently about 15% of revenues).

Very thinly traded stock (ave volume is 526 shares per day).
Last looked at them here.
They purchased their leased office property in Clearwater, FL, and took out a $508K loan.
CEO owns 3.4 million shares (including 60K options)

Filed 9/29/06 for period ending June 30, 2006.
Incorporated in Colorado.
8 million shares on Sept 26, 2006.
No customer concentration above 5%.
Manufacturing done by a small, family-owned facility (they provide a single ingredient used in all of Amerx's products). No written contract or minimum purchase requirements. Other manufacturers could replace them on reasonably short notice (including the proprietary ingredient) with only short term impact on the business.
Some FFDC Act and FDA regulations.
Intense competition in Amerx business and Amerx doesn't have an economy of scale. Amerx relies on customer service for any sort of moat.
12 full-time employees (3 mgmt, 6 sales, 3 admin): 8 Amerx, 3 Sirius.
3.8k sq ft office space.
No legal proceedings.
158 shareholders of record.

Preferred stock can receive a 10 cent per year per share dividends if declared. None declared. Pfd share can be converted into common 1:1. 10K shares were converted in 2006. 205K outstanding.

300K options outstanding (.20 strike), 604K more available for issue.

Revenues up 5% for the year, due to growth in customer base (Sirius revenues down 0.2%). Amerx shifted to the physician market and hopes to capture more of this market in 2007 and go into new markets such as gov contracts, dematology.

Gross margin increased to 78% from 76% (I'm wondering how they measure this considering that it's supposed to be a competitive environment).

SG&A is down due to missing two months of CEO compensation (previous CEO died on Aug 27, 2005, was replaced by CEO's [seemingly quite qualified and experienced] wife). Otherwise, it would have gone up by some amount. SG&A dropped to 62% of revenues from 64%.

NOLs exist, $4 million expiring in various years through 2022.

Audit fees: $32K. $1K tax fees to same company.
Auditors for 2005 and 2006: Ferlita, Walsh & Gonzalez, P.A. of Tampa, FL

Small amount of net cash ($70K)
Assume about 8.6 million totally diluted shares.
If they paid normal taxes, then net income would be around $250K.
Pfd dividend requirements were $21K.

Net income with taxes would be around 3 cents per totally diluted share.

Cash flow from operations was $363K with $9K of capex (prior year was $211K cash flow from ops with $10K capex, cash flow hurt by deferred tax change and inventory increase).

Some related party borrowing.
PP&E is $204K depreciated down to $63K, mostly office equipment.

Perhaps the stock is worth around 50 cents. The best ask has been around 40 cents.

This is an interesting company. I like what I see in the 10-K: it's simple and straight-forward. They seem to know what they're doing. I may have messed up in my calculation of what their taxes might be.

continue following

The Woodman and the Serpent

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?