RE:Questions for Old Dog GrahamB wrote: Hi old dog,
Long time since we spoke.
Saw that you had posted on this VPT, recommending people buy in over the HUGE website, so you stimulated me to look into it.
Rather than post over on the other the HUGE website, I thought it folow- you over here, and give you my $0.02, FW IW
Took a quick look at your new company-but it didn’t pass my screen.
The major concerns that I would have about this company, would be the financials,, negative cash flow, the debt structure, insider sales, and the debentures and who is buying them.
Specificallyt:
1. How did you feel about the negative FCF of 484,000, and loss of about 1 million, and enlarging share count on recent financials in sedar?
They are dependent on financing to continue operating and required an emergency loan via CIBA in April.
2. They also have a statement of going concern:
‘ There is no certainty whether the Company will generate significant revenues or attain profitable operations in the near future and there can be no assurance that it will achieve profitability in the future, as it incurred a loss of $1,111,838 and had a negative cash flow from operating activities of $484,599 for the six months ended June 30, 2020, and has accumulated $39,059,088 of losses as at June 30, 2020. The Company's ability to continue as a going concern is dependent on its raising of future required capital, bringing its products to market and achieving and maintaining profitable operations. The outcome of these matters cannot be predicted at this time.”
Sedar.com
3.What about the debentures
“the Company issued $1,511,000 of convertible non-secured debentures (“Debentures I”) which mature on January 25, 2022, and issued a total of 9,066,000 common share purchase warrants (“Warrants I”) …
And
“Debentures were originally valued at the present value of the Debenture I interest and principal repayment cash flows, less transaction costs of $101,252 for a value of $957,748. Debentures I are accreted up to the face value of $1,511,000 over the life of the liability using the effective interest rate method, at an effective rate of 23.9%.” www.sedar.com
To me, 23.9% is a huge rate, even more than you pay on a credit card! For a company that already has a negative cash flow to me this is a red flag.
Also who is buying the debentures “
Read this from SEDAR
“Two directors and officers of the Company purchased $383,000 of Debentures I under the offering.
Finders acting in connection with this offering received finder’s fees in the amount of 488,160 finder’s warrants. Each finder’s warrant is exercisable for one common share at an exercise price of $0.175 per common share until July 25, 2020. The finder’s warrants were valued at $30,000 by using the Black-Scholes model and recorded as Contributed Surplus (see (note 15))”
4. The last question I would have relates to insider sales
Insider sales are also striking, which total in the millions, and I will not repeat them all because it is fairly extensive but of interest,
George Adams alone has sold over 4 million-for a company with a market cap of 7 million?
canadianInsider sales.com
(I can post thats eperately-but this is getting long
Listen I don’t have a bone in this dog fight-just doing a brief forensic on your recommendation that people here buy VPT
Old dog-looks like a dog to me, based on facts
Thanks for dropping by though, and for the tip, I think I will pass on this one
All mmy naive opinion, and dont liosten to me, I am an idiot, and do your own due diligence
Hey old dog,
Sorry to hear things haven't turned around.
'The math didn't work on this for me, as noted above.
Was waiting to hear the plan for liquidity in case there was a chance to come in at a bargain-but haven't heard any details from the shareholders meeting.
'Have this on my watch list in case the story and numbers support it.
The issue with liquidity,solvency Cost of capital, and massive insider sales were a problem.
'The story is interesting, but hard to market and sell a product if you lack the resources.
'Anyway all IMO, and I know little, just enough to keep my hard earned cash !
'Good luck and have a nice holiday