Leafs4Life wrote: I agree with much of this and disagree with some.
My area of agreement is that a potential financing is weighing on investors' minds. The stock will have trouble really climbing until their cash situation is solidified - giving them a roadmap to profitability.
However, I don't think the situation is quite as bad as you make it out to be. I just looked at some of the company's disclosure. Here are some numbers.
In the most recent available financials we learned that LDS has a gross margin around 30% on their oil product. We don't have margin data on strips yet but lets assume it's similar.
They did 1.17m revenue in October, we have been told by management and IR that they did 1.35m in November and a similar number in December (we may get more info on this when they release the December form 7 on Tuesday). So they will have done close to 4 million in revenue for the quarter - gross margin of 30% - about 1.2 million in profit before operational costs ($400k free cash per month).
You said that LDS operations cost approxmately 1 million a month and I can see why (LDS lost 8.7m in the first 9 months of 2018). However, I think the number is a little lower than the first glance makes it out to be. Share based compensation is the largest item in their expenses, accounting for 1.7m in the last 3 months. Share based compensation is included as a loss for reasons of accounting that do not necessarily reflect the state of the business. In the MD&A the company states that it had $3.498m in working capital, balance sheet says they have $1.2m in cash.
If you ex out the line for share based compensation from the total operating expenses for the last 3 months of 3.7m you see a burn number closer to 2m instead of 3m for the previous 3 months of operations. 2m / 3 months is closer to 660k per month.
So if we look at LDS generating 400k per month in free cash and spending approx 660k on operations the situation is not quite as bleak. They are still losing money but if they can grow revenue to $2.185m per month while maintaining their 30% gross margin they will be close to breakeven at a $660k burn.
If they get to breakeven before they burn through all their cash then the company will be in a much more advantageous position when negotiating a financing. That's my two cents.
jandd wrote: until a financing is arranged.. The share price is under the control of the investment bankers who will not allow it to break out until a round at these levels is arranged... They will simply short it to keep a lid on it. Besides - selling short into the market at .34 is smart since the short sellers will cover in the market when they buy units in the financing.. Sell at .34 and buy back at .25 or .30 with attached warrants.
No amount of news will allow this to move until this happens. Everyone is offisde and they want to get whole again. The only way to get whole is a round at these levels...Most investors, myself included were duped into exercsing 0.75 warrants since at the time the company had released pro-formas indicating montly revenues of $10 million by the end of the year.
hopefully the round comes with conditions as the current burn rate of $1 mil per month is not sustainable - and this burn rate factors in $1 mil per month in revenues... Have a close look at the financials - the wages and overhead are way too high and at the same time the window to raise the big bucks on BS is gone - the market is now in a show-me dont tell me mode, moreso with this company as Brad has fed the market so much BS that has never come to fruition that there is tremendous apathy and dis-trust for this company. Their reputation on the street is terrible and the bankers that backed them in the past are bitter. Before I handed over even a nickel I would insist that Brad step down as CEO and that the company bring in someone with previous operations expertise.
The problem with this company is thier focus and direction seem to change every few weeks... First they are making strips, then resins, then reveur, then back to the reformulated strips, then some bs about large resin contracts, then back to the strips, now it's nurseries... A complete lack of focus, accountability and most importanlty execution...
The above said this company is very cheap based on price to revenue and price to book value - clearly the market is discounting this company for a reason. I mean look at NGW - they are a kind of like a mini-me to LDS and are a year behind, but they now have a market cap larger then LDS. This is becuase this far they have not dissapointed everyone so much thus they still have credibiltiy, something sorely lacking with this compnay all becasue of our CEO who keeps on overpromising, missing milestones and changing focus. he can only blame himself for the current predicament. I will not buy anoher share until Brad at least leaves the role of CEO. He gets a B for his ability to get permits and deal with beauracracy, he get's an F for operations and he gets an A for his ability to bull sh*t.
JMHO on a Saturday.
Jandd