WebTech Wireless Inc WEWWF

Q1 2010 results and liquidity

[gwrbi]

WEW has $4.8M in free cash plus net liquid assets (A/R plus inventory less short term paybles) of $8.7M totalling
$13.5M in short term liquidity.  In addition they have $3M in available and unused credit lines.

If we believe the last 6 months of pain/suffering/distraction/restructuring is behind the company, and now go forward operations can be at minimum cash flow neutral - liquidity is a non-issue.

However, the market (see
.48 SP) feels either this company is not capable of generating meaningful profit margins (and thus is a waste of time), or is on the verge of being insolvent (which is highly improbable as they have no debt), or is on the verge of an equity issuance (which will further dilute current shareholders).   All of the above negativity is baked into the current share price.

WEW's greatest form of liquidity and upside will come from it finally turning profitable, and justifying a multiple of earnings (to support the GIS acquisition and the $28M in purported intangibles on the balance sheet).  

The current market cap is $44M so in my mind it needs to generate a minimum of $5M in earnings this year (or future annualized earnings) in order to justify a $100M market cap (north of $1 per share).  Represents a base 20 multiple (for a moderate growth company).

Turning profitable (which is strongly possible, but not yet proven) will make all the naysayers go away.  However, a double from here (which I believe in) will be as far as this SP goes until the real dream growth kicks in (if at all).

Not sure on the rules, but I think the TSX requires a minimum $1.00 SP, so look for a reverse stock split at some point.