Desperate situation requires desperate measuresI am Rasool Mohammad, as my profile says it. As the subject line says actions that might seem extreme under normal circumstances are appropriate during adversity. But SNS is nowhere near there.
I dont want to sound arrogant but for those who dont know me, I am the founder of SNS. I am asked to speak at conferences and to not sound too arrogant again, I am an expert in the frac sand, if you will, of the business that Steven Goldman is currently representing here ( and I am assuming he has the authority to speak on the company’s behalf)
For the general public information when I asked the SNS board & Management on 10/29/2018 ” If the company is losing money which we will be if not already are, the management consider pay reduction till we start break-even or making money; cut cost as much as we can as our monthly cash burn rate is significant, specially if the market doesn’t turn around Q1/2019 for the NW sand.”
At this time the company had US$5.7MM in cash
I saw a shift away from Northern white sand and downturn coming, as I have been boots on the ground
Then I wrote to the board and management on 12/10/2018 “It seems to me (Rasool’s view) we are back to the days when were just started pivoting into frac sand; We are working on Pivoting into R/Bs (regional brown sand), but its not sure if we will find the right deal, buyer of the sand or the capital to get into it. And in the meanwhile our monthly burn rate is fairly healthy.”
The company had US$4.8MM in cash Dec 31, 2018
May 17, 2019 I wrote to the board: With the Select Sand overhead being high and unsustainable at current lower sales level (function of market conditions etc.) and management focus on the law-suit, is raising the question of SNS being a going concern?
The company cash position was down to US$3.3MM March 31, 2019
As per the company last PR the company has (June 30, 2019) of approximately $1.9 million
In three months the company burnt US$1.4
If the burn rate is cut in half, so instead of 3 months(October 2019) the company will run out of cash in Feb,2020? Am I correct?
My question is how much (%) of the burn rate is of the US/Houston office and how much is of the operation in AR? Canada office doesn’t burn anything. Darren was the first one to cut his wages and I followed.
As per the Compensation CEO 25% cut will make him receive over US$220,000 per year? Am I right? The biggest cut should start from the top.
Does the company need 6 directors?
Does the company need 3 CFOs (mind you Darren in Canada has reduced his wages significantly)
What would the company do between now and Q4 if and when the company lands the contracts? Burn at the assumption that WE WILL GET A CONTRACT? I would cut SG&A right down to nothing and if the contracts get signed, then bring it back up; not the other way around. Chances of landing a contract where the market is over supplied by 55MM tons is very slim. What are the size of these contracts and will the company make money? As it is I had a sand producer in AR (competitor) called me that SNS is ruining the sand market by selling sand at rock bottom prices. So we are losing money now
The regional sand is oversupplied by 35MM tons, what makes SNS so special that they can sell regional sand at profit (where the spot price is now $10 per ton) and majors sand producers are reducing production and work shifts; that’s if SNS acquires a regional sand mine, as per their last PR. Who would finance SNS sand deal in todays market?. Sand business in the capital market is swear word today. There is 20 sand deals looking for money today like SNS would if and when they have one.
As far the NW sand, all the northern white (NW) sand being displaced by Permian sand is looking for home elsewhere. And Guess what, they produce a lot cheaper I mean a lot cheaper than we do. They are selling in the same market SNS used to sell. There is 25MM tons of oversupply in NW sand and its not going away in 6 months, if SNS cash last that long.
Here is a financial pattern:
Date Cash
10/29/2018 US$5.7MM
03/31/2019 US$3.3MM
06/30/2019 US$1.9MM
12/31,2019 ???
The numbers don’t lie.
Another pattern, as it was the management and the board( except Douglas Turnbull) didn’t want to admit that there was a shift coming towards brown sand and guess what it ,did, and they kept drawing wages.
Again they don’t want to admit that we have to wait for two year for the market to turn around, for the marke to balance, and in the meanwhile they keep drawing wages, because if they admit, we need to hunker down, guess what they will get paid less and that not what they want; And God forbid if you ever bring our share pirce being down, not of the management CONCERN AT ALL, and my net worth in SNS shares has dropped from $3.4MM to $59,000.