Weighing in...For months I have watched the stockboard here and been disappointed by the lack of actual investor knowledge, the name calling and the pumping and bashing. If I might have an opportunity to weigh in with what I feel are some pertinent points and questions:
Based on the knowledge that I have received, Big Mac, as Banx so lovingly loves to refer to him, has done a good job of getting rid of the overwhelming waste of money that the previous managment team likely lined their own pockets with. He has reduced costs enough to get BMO to beleive in hime to convert to a term loan. This is good, but how was this achieved?
This cost savings was achieved by cutting staff to a bare minimum and reducing marketing budgets and this is the rub. Marketing is an essential part of an ESL school and with no marketing, the company is missing another vital component of a successful business - revenue.
As far as I understand, revenue in most schools continues to wane and Loyalist continues to bleed money. Cost cutting is a short-term solution, which brings me to my questions:
1. What is the plan to improve revenue?
2. Based on the Financials form December 31, 2015 to March 31, 2015 Loy (KGIC Inc) posted a loss of $3,633,315 or over a million a month. As far as I understand, this has not changed, (although there will likely be less loss for the summer months) and if revenue does not improve then investors will be putting in money to seal the holes in the ship while new leaks are sprung. I know part of the problem is the damaged reputation with agencies, but is this reputation being repaired?
The reality is that anyone can save money by cutting jobs and forcing employees to cover the slack (which they will to keep their jobs; they need money to survive.), but it remains to be seen whether Big Mac can rescue the revenue. My sources have indicated otherwise, but time will tell.
The cold hard fact is that if revenue does not increase then there will be a need to maintain a continual line of investors to pony up a $1,000,000 a month. Of course, they could cut more staff to save some costs, but I doubt Big Mac has this on the agenda as he tries to build a company, not destroy it.