By Jim Schutz, Oculus CEO
Our founder & CEO, Hoji Alimi, has for years generously asked for my advice to help create long-term shareholder value at Oculus. Hoji and the board recently asked me to stop “with the free advice” and step up as the new CEO—an opportunity, by the way, which I treasure as once-in-a-lifetime chance.
During the first hundred days of this transition, my hope is to report back to you—our shareholders—regularly, via this column. Over the next few months, please stay tuned as we further detail our strategies, our wins, as well as the challenges ahead.
For those of you I have not met yet, my name is Jim Schutz and I’ve been the chief operating officer at Oculus since early 2009 and general counsel since 2003. I’m an attorney by training with a recent track record in buying and selling companies, divisions, products, R&D projects, as well as licensing and partnering. In my tenure as COO over the past four years, both Hoji and Oculus’ CFO, Bob Miller, requested that I focus on, and orchestrate, all internal operations including:
- Sales and marketing
- Research & development
- Intellectual property
- Regulatory affairs, and
- Quality assurance
The team at Oculus has done a terrific job over the past four years in building a solid channel of global distributors and partners.
Hoji and Bob handled the rigors of Wall Street and shareholder issues while I got to work with our team on fine-tuning all internal and operational issues.
As Hoji mentioned during our recent conference call, it is now a perfect time to stop facing inward and step into the breach as CEO to allow Hoji to focus on Ruthigen, our exciting new spin off. Hoji’s passion is in R&D, regulatory affairs and clinicals—he’s truly an industry expert—and he’s the perfect person to lead Ruthigen moving forward.
I can’t thank Hoji and our board of directors enough for the trust and confidence they’ve demonstrated by inviting me to serve as the CEO of Oculus. Bob, our veteran CFO, will be staying on with the Oculus team, so his steady hand will remain with us.
Below are my thoughts regarding a snapshot of Oculus, as I see it, highlighting both the positives and challenges that lie ahead. Our latest financials were disclosed for the quarter ending September 30, 2012, so I will focus on those for a moment:
- For that quarter, we generated revenues of $4.5 million, the highest in our company’s history.
- Our revenue run rate is approaching $18 million for the year.
- Our cash position is healthy—$8.3 million as of 9/30 and will continue to be healthy as we reduce our burn.
- Earnings before interest, taxes, depreciation, amortization and stock comp charges (EBITDAS) for the first half of our year was negative $235,000. I look forward to the day when we can just highlight our earnings!
- Customers love our products. We continually receive terrific feedback on our products and our customers use our products in the most creative ways. I cannot recall the last time a customer called to complain or returned a product because it didn’t work.
- We have solid partners selling more than 70 of our SKUs/products in diversified markets.
- We have a brilliant guy running R&D who’s created a robust pipeline of new products and an intellectual property portfolio of 24 issued patents and more than 100 patents pending around the world.
- We are blessed with a first-class team of employees here in the United States, Mexico and in Europe who are dedicated to manufacturing and selling the highest quality and highest-margin products. They’ve done a superb job over the last four years making me look smart, which is difficult at best. Just ask them. Or my beautiful wife. Or Bob Miller.
- We are nearing profitability and earnings per share.
- Yet, let’s be clear, we still have challenges we must confront: (a) low stock price—we are only receiving 1.2 times revenue as a multiple, (b) NASDAQ listing issues and (c) a potential reverse split looming.
So what am I going to do differently, post-spin off, than the company has done before?
- I’m a high revenue growth, value investor. I hope this speaks volumes about where I think we ought to steer this company.
- We like positive cash flow. Personally, I like to invest in positive cash flow companies, I like to work for positive cash flow companies and as CEO, I’d like to turn Oculus into a positive cash flow company … as soon as we can.
- We’d like to build up our war chest, our savings account if you will, and when the time is right, put our money back to work.
- We’d like to add new products to create additional revenue through two methods: Organically via our own R&D as well as through acquisition.
- We’ll market these new products through a) current partners b) the addition of new partners, and c) the expansion of territories in which we are currently selling
- Speaking of licensing and acquisitions, Bob and I have experience here:
a. Bob and I will personally negotiate any and all deals.
b. We won’t overpay.
c. We’ll start small, doing one, two or three deals a year and earn your trust—that we know how to tuck in products and use our existing distribution channels to increase sales.
d. We won’t take big bites of the apple just to satisfy short-term investors or to meet short-term goals.
e. We are not in a hurry – we can take our time and acquire with intelligence.
- Finally, upon spinoff of Ruthigen, Bob and I have an opportunity to reduce our general and administrative expenses along with the clinical burn, thus enabling us to drive the company as rapidly as possible towards (a) profitability AND (b) quarter over quarter, year over year, attractive growth.
One final note of gratitude. I cannot thank Hoji and the board enough for listening to my opinions over these past many years, and now supporting me in my new role as CEO. To our three sets of stakeholders: (1) Oculus employees, (2) customers and partners and (3) our shareholders, we will do our best to make you proud and thank you for your continued support.
Speak again soon.