RE:ITS UP ,UP and AWAY Tomorrow!!!Previous management paid too much attention to acquisitions and insufficient attention to margins and the bottom line.
New management will be aggressively cutting costs and unlocking the full earnings potential of its assets.
Expect to see gross margins hit 30% in Q2 and rise above 50% by late 2015.
Loy is heading into its strongest seasonal earnings season.
The next 2 quarters will see a total transformation in Loy's financial metrics.
New liquidity in the range of $2-million to $3-million will be injected into the company prior to the end of June 30, 2015 in the form probably of preferrance shares.
These funds would be added to the company's working capital. During the forbearance period, none of the new funds will be applied against the $8.9-million total amount owing under the acquisition credit facility.
A number of the company's directors, officers, management, employees and several outside parties are prepared to contribute $2-million to $4-million of new liquidity to the company, in conjunction with execution of the forbearance agreement as noted above. These funds would be firmly committed in order to achieve the best possible outcome prior to finalization of the forbearance agreement.
The earnings potential of Loy was barely scratched by previous management who were too focussed on growing the top line.
If all works out here as planned, Loy will be a superb cash cow and a great investment at these penny prices.
The debt here is actually very modest at $8.9 million.
With 50 % gross margins, Loy should be able to throw off at least $ 20 million in operating cash flows and now has enough tax losses to offset taxation for 4 or 5 years.
Its a great opportunity to make a quad or more on your investment over the next year.