RE:RE:RE:RE:RE:RE:Why debt not an issueLifexprt wrote:
Looking at it from a strictly numbers perspective, they claim to have increased sales by 30/40 percent (as per cc) for recreational/medical, subtract the 5 million in bulk sales, we can ballpark $10 million in Q2. With reduced SG/A expenses and better margins they could have managed to limit cash burn to a few million in Q2. Potentially Q3 could be neutral from the cash perspective. How sure are we they are in dire need of financing? Would BMO agree to terms knowing their dire situation? I don't think so, maybe it's not as bad as some of us presume.
Yay... some real discussion. I think Q2 revenue was under $9 million. Maybe as low as $8 million. We won't have real long to find out. How can margins get better than selling 4,000kg for $1.25 that only cost them 11 cents? I still can't figure out 11% gross margin when 80% of the kilograms sold in the quarter were at over 90% margin. They had $14 million over three months ago and still had $12 million in accounts payable. You also need to remember that you don't get paid right away as sales increase. Your accounts receivable goes higher as there is a delay to getting paid both from the provinces and the unions that are direct-billed for increasing patient sales. That is why you need more working cash as you grow.
Once again BMO has a secured lien on pretty much everything. Raising the interest rate and only extending principal payments for six months was no big deal for them. This company is not going bankrupt in the next year as some are claiming. It just doesn't look like they are turning profitable soon. they need cash and will do a raise soon. they will have no problem securing this financing to give them time to turn things around.