RE:Just because something is cheap doesn't make it good value!I agree that continuing to lose money while already owing very expense debt is a pretty bad spot to be in. Hopefully they can sell some of their brands soon to get rid of the expensive debt and survive long enough to become profitable. Although then the question is how much are they actually worth to another company? If Greenspace is running them at such a loss, would other companies be able to run them profitably (and what would they be willing to pay JTR for them?).
happyhunting wrote: Yes, the market cap is now very small relative to sales. However, a lot of people seem to be ignoring the $22m+ in expensive, and quickly growing, debt.
The gross margins at 24% are just too low to support distribution costs (8-10%), marketing (5-10%), salaries and overhead, plus another $2m (3% of net sales) in interest costs. Without a miraculous surge in revenue, how is profitability and postive cash flow achieved in the short term?
In the meantime, debt holder and suppliers will be anxiously looking at both results and the share price. If they decide that they have had enough, then things can unravel very fast. This is a highly speculative and risky buy - if a creditor enforced firesale occurs, debtholders and other creditors will get their money before shareholders!