The Good the Bad and the UglyTHE GOOD
-The loss for the quarter was quite a bit less than my expectations of 7 million plus.
- They got a new CFO
THE BAD
- Their balance sheet stinks
- Their sales in California were tied up in their accounts receivable of 10.5 million. Did they forget to ask for payment? What are the terms? Are they over 90 days? This certainly does not help their cash position. Cash is down to 1.6 million at May 30, even after receiving 5.5 million in bridge financing after March 31.
There is 8 million tied up in inventory. This makes no sense all. 1.6 million cash and yet you spend 8 million on inventory ?
THE UGLY
-With just 1.6 million left and a payroll to meet at the end of May and of course June, its just a matter of time before they
run out of cash. I see accounts payable and accrued liabilities are 12.9 million. Thats not a good ratio to cash on hand of 1.6 million. At what point do creditors start taking legal actions to demand payment?
- Proceeds from sale of Canadian assets up to 5.5 million are not going to shareholders as the lenders of the 5.5 million have first dibs. I would not expect much more than 5.5 million until the lawsuit is settled.
-They need cash now- not a month from now. When the PP is announced I would expect terms that are UGLY ,in a word ,for current shareholders.
After they get out of this hole with a PP which I think they will, they then need to raise another 10.5 million to buy equipment to finish the glass palace. Until they raise this money, buy and install the equipment the building wont be finished.
These are my personal opinions and questions. I have been wrong before as I was on forecasting the quarters loss, so take these comments with a grain of salt. Will wait to post again when we see the terms of the next PP which i expect within two weeks
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